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.Continue Reading
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
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 >
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 >
To dispute information on your credit report, gather information supporting your dispute, type a dispute letter, send the letter to the appropriate credit bureau, allow the credit bureau to investigate your dispute and follow up to make sure the information was corrected. The entire process takes a few weeks.Full Answer >
Credit Karma monitors a person's credit by obtaining credit report information from TransUnion, a major credit report agency in the United States, according to the company's website. It provides a free credit monitoring service that keeps track of credit reports every day, and it informs cardholders of any considerable changes.Full Answer >