It’s always a scary moment when you’re delayed on your debt payments. You’re usually already in a whirlwind of emotions as things fall apart around you. Nevertheless, don’t panic just yet because there are some options available to you, including sending a pay for delete letter, for example.
Sadly, it’s far too easy to get caught up in the vicious circle of debt. In hindsight, many people wish they’d never applied for that credit card. Even store cards can be a mill around your neck because they make money look so easy. At the end of the day though, someone will have to pay eventually. The best tip is to stay away from credit however if you have found yourself lost in it then there are options and you can find a way forwards.
What Factors Impact your Credit Score
- Debt Usage
- Store cards and credit cards
- Banking and employment history
It’s often worth understanding what impacts your credit score before launching into how to save it. Essentially, your debt-to-credit ratio is a key factor that plays a big part in your credit score. This tells someone how much of your available debt you’re using. As an example, are your credit and store cards maxed out? Another factor is how long you’ve had those credit cards for and how well you’ve been paying until now. Debt isn’t necessarily a bad thing and can actually be a positive if you’re paying regularly and on time. After all, lenders are making money from the interest you’re paying them so they’re happy.
Credit history is important but so is your banking history as well as your employment history. A new customer is always a little nerve-wracking for a bank. In contrast, someone who’s been banking with them for years and never had any problems is potentially less risky. Also, they’ll know your income history and if you’ve received regular salaries for some time.
How to Save Your Credit Score
Even one late payment can cause a significant drop in your credit score although this does depend on your credit history and type of payment. However, the following options are worth considering:
- Goodwill adjustment letter
- Pay for delete letter
- Ensure other accounts are up to date
- Wait for 7 years
Goodwill adjustment letter
Talking to your lenders is one of the first things to consider when you’ve made a late payment. Perhaps you’ve made a mistake and they’re feeling generous enough to let this one go. In those cases, they’ll remove it from your credit report. Perhaps you can even give them something in return such as paying a few payments upfront in one go?
Pay for delete letter
This option is very similar to the goodwill adjustment letter except that in this case, you’re offering a direct payment in return. We’ll review this option in more detail below though.
Ensure other accounts are up to date
Regardless of which option you go for, you should still make sure that all your other payments are up to date. Of course, sometimes in our lives, we simply can’t pay and we get overwhelmed. In those cases, you can still get help either from a lending agency or credit repair advisor. They’ll basically review your case and come up with a strategy to improve your financial status overall.
Wait for 7 years
If your credit score only has the one late payment and is not too badly affected then you might simply want to wait. After 7 years, all late payments are automatically cleared off your credit report.
What is a Pay for Delete Letter?
- Negotiation strategy
- No guarantee
As mentioned, a pay for delete letter is a negotiation strategy to try to convince your lender to remove the late payment record from your credit report. Lenders have no obligation at all to comply and in fact, credit agencies tend to frown upon it. Nevertheless, it’s completely legal and if your lenders are friendly, then it could be worth having a go. You actually don’t have anything to lose and a lot to gain.
Unfortunately, bad credit scores haunt you for at least 7 years and you can also find yourself stuck in a never-ending cycle. Sometimes the best thing you can do is press pause, make some major changes, whether this means getting a loan or downsizing your house, and then trying to start again. It’s definitely not easy but there are some good companies out there who can advise you and help you along the way.
Final Thoughts for Saving your Credit Score
Clearly you can do things to save your credit score such as negotiate with your creditors. However, the best strategy is the long-term one where you try to work with your debt. This isn’t easy and you might need to hire a credit repair company to give you some tips and advice for moving forwards. Regardless of what you choose to do though, remember that there are options and you’re not alone.