A letter of explanation for a mortgage underwriter should explain delinquencies on a person's credit report, how they happened and the steps being taken to ensure they do not occur in the future. Often, a mortgage underwriter will request a letter of explanation in order to validate his or her reasons for approving or denying the loan.Know More
A letter of explanation is helpful in pleading one's case to a mortgage underwriter. It may be the one piece of information that swings the decision from a "no" to a "yes."
Step 1: Do the research
Take the time to pull a personal credit report. Review it carefully and note any blemishes or dings.
Step 2: Gather supporting documentation
Supporting documentation helps prove one's case. For example, if delinquencies were due to a hospitalization, make copies of the hospital bill showing the inpatient dates.
Step 3: Write the letter
The letter should be professional and to the point. Use bullet points to enumerate the credit blemishes that are addressed in the letter. Give the reason for each delinquency and an explanation of how it will be avoided in the future. The letter should be contrite and reassuring, not flippant or casual. The goal is to assure the underwriter that the applicant is a good risk for the loan.Learn more about Credit & Lending
If the letter to explain bad credit is for use in securing a home mortgage, Trulia recommends ordering a copy of the credit report and detailing the reason behind each negative remark listed on the report. However, if the letter is to ask a bank to consider a short sale of a property, the purpose is completely different, according to About.com.Full Answer >
A credit explanation letter should be clear about each incident, include the date and amount, give a concise explanation and what is being done to prevent it from happening in the future. A credit explanation letter is often requested by entities, such as a potential employer or mortgage lender, who might be interested in a person's credit history.Full Answer >
In the world of finance and economics, a letter of explanation is a formal letter to a financial institution that gives specific details regarding an incident or circumstance that is outside the normally accepted scope of business. In some circumstances, the letter of explanation is given directly to the major credit reporting bureaus to be given out with a person's credit report any time one is requested.Full Answer >
Refinance a mortgage by fixing errors on your credit report and making the application packet look as attractive as possible. Be prepared to prove income, savings, and any raises to occur later in the year. Moreover, it is recommended to have the home appraised again.Full Answer >