People with credit problems often write letters to underwriters, called letters of explanation. This occurs when you have credit problems from the past which have lowered your credit score. A letter of explanation is designed to explain the situation to the underwriters to convince them to approve a loan or offer you a lower interest rate. A letter to an underwriter should be written very formally and professionally.
Obtain a copy of your credit report. Look it over and make notes about delinquent accounts or other adverse information contained on it.
Address the letter. Begin writing the letter to the underwriters by addressing it "To Whom It May Concern."
Introduce yourself. Offer a brief description of who you are and why you are writing this letter. Give details regarding a loan you are applying for and explain that this letter is an explanation of your current and past financial situation.
Discuss each delinquent account listed on your credit report. Many people have valid reasons for delinquencies on their credit reports. People who have suffered a devastation of some kind, such as a divorce or death in the family, are often the ones writing letters of explanation. Explain each account you have and the details surrounding the delinquencies.
Attach important documentation. Any important documents that will help you prove your case should be included, such as: bankruptcy papers, divorce papers or receipts for things that were paid despite the status on the credit report. Indicate in the letter all of the documents you have included.
Write a plea to the underwriters. This type of letter can be relatively short or extremely long depending on the amount of information and financial issues. Spend some time creating a plea at the end of the letter. This is an attempt to ask the underwriters to take the information you have supplied into consideration.
Proofread the letter when it's finished and ask someone else to look it over for mistakes or omissions. Give the letter to your loan officer, by mail or hand-delivered. Your loan officer will forward to the appropriate underwriting company.
Things you need
- Current credit report
- Bills and official documentation