Collection accounts on your credit reports are never a good thing. Even a single collection listing can lower your credit score far enough that you will not be approved for low interest rate loans which can end up costing you a significant chunk of change. A single collection account which may have been for less than a hundred dollars could amount to many thousands of dollars when you factor in higher interest rates and higher car insurance premiums because of the impact it has on your credit score. For this reason, before applying for a new home loan or other type of credit, it is advisable to try getting collections accounts erased from your credit reports.

If you have only a few paid collections on your credit reports that are of a relatively small value, you'll want to start by sending the reporting collections agencies a goodwill letter. Goodwill letters are you asking the collections agency kindly to stop reporting the collection account to the credit bureaus. And while this may seem like a futile attempt, goodwill letters have proven to be surprisingly effective for getting negative items removed from credit reports.

When writing a goodwill letter, the goal is to humanize your situation and make the person on the receiving end of the letter sympathize with your predicament. A sample goodwill letter to a collections agency might read as follows.

"Dear Sir / Madam,

Last fall I received a parking ticket during finals week at my college because I was running late and had to take the first spot I could find. In the confusion of finals week, the holiday break, and the start of a new semester, I neglected to pay the fine and it was sent to your collections agency. As soon as I received notice from you, I paid the debt in full.

My husband and I recently began shopping for a new home and are finding that the negative listing on my credit report is hurting our ability to get approved for some financing. I'm writing to ask if you would kindly remove the collection listing from my credit report.

Best regards,

Jane Doe"

Sometimes it is as easy as that: a brief, simple, non-threatening letter written in a friendly tone. If the letter does its job, your credit reports look that much better and your credit score can see a big jump. If not, you are out the time it took to write the letter and the cost of first class postage.

One thing to remember is to make sure you do not try to use this method to remove an unpaid collection account. Not only will it not work, but it could make matters much worse for you. This seems like a common sense rule, but it is something people sometimes do not think about, especially if they are enlisting the help of a credit repair company to help fix their credit reports.