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Writing a Credit Letter

How to Write a Credit Letter if required

Once you have been pre-approved and find a house you want to buy, an underwriter may request that you write a letter to explain various items on your credit report. A well written credit letter will improve your chances of getting your loan application approved. Below are some suggestions to follow to make your credit explanation understandable.

1.  Check for accuracy. Call each creditor and ask for a reference or credit history. This may show a better payment history than what is reported on the Credit Report. It is not enough to just say something is wrong with your Credit Report, you must prove it. Send any corrections to your Loan Processor to update your Credit Report.

2.  Address the letter to your Loan Processor or Loan Officer to avoid having the letter misplaced.
3.  If you have past-due, collection or judgement accounts that must be cleared, please DO NOT pay these debts off with a personal check due to the delay in the check clearing process. Please utilize a money order for this purpose and forward us a copy.
4.  The letter may be neatly hand-written or typed.
5.  Introductory Paragraph – Begin the letter with a statement about who you are, where you are buying, and the purpose for writing the letter.
6.  Body of Letter – Group the late credit items around the circumstances that caused the lateness on the account. Start a new paragraph if there is a different reason for the lateness on the account. Be sure to address each late payment. Each paragraph should restate the dates listed on the Credit Report, the creditor’s name, and the circumstances that caused the lateness on the account. Attach any information that you may have to support your explanation. For example: “I had an accident at work and was not able to work for 2 months”- include copies of medical bills, workers compensation claim forms, proof that you were not paid through this time period, etc. Explain that the problem is now over and how it will not happen again. For example: “I have saved up a three month cash reserve so that this won’t happen again”. In general, problems that created credit issues that were either beyond your control, unexpected, or one-time problems, do not typically keep you from obtaining loan approval. The burden of proof rest with your letter.
7.  Inquiries – An inquiry appears whenever you apply for credit. First Home Mortgage will need to know if have applied for or obtained any additional debts since the time of your application. Write the reason for the inquiry and that no new loan has been obtained. For example: “The reason for the Sears inquiry was because Sears was giving away a free gift at the Mall if you filled out an application. I did not create any new debt with this card.” If you did open a new account, provide the new account number so we can check the reference.
8.  Conclusion – Summarize why you are a good credit risk and why you feel this loan should be approved. This is your opportunity to explain how you have improved your credit circumstances.
10.  Keep a copy of your letter.

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Bernie Alvey
Senior Listing Agent
EXIT Landmark Realty

Direct: 301-752-7922
Office: (301)934-2022 x272

Email: bernie@alveyproperties.com

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Bernie Alvey reviews

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After listing my house I received a full price contract in 2 weeks - very happy! Bernie recommended a contractor for minor repairs found during the home inspection and repairs were made in a timely manner and to satisfaction of buyers. I couldn't be happier with the entire process. Settlement held in 45 days from list date and all parties were pleased and on their way. Great job! Coach Jim Donahue
Bernie is the best agent I have ever worked with. His knowledge and negotiation skills are impeccable. He was always alert, responsive and attentive for my needs. I have used him as a buyer and seller agent, he was great at both aspects. He even help me gain a a full price offer on my home, which was a profit from a home I owned for only 14 months. ***Highly Recommended*** Michael Paige
Bernie is that agent that you hear about but never seem to really find, EXCEPT I DID! He is current with technology and that is so important to finding a home, I used his website and was able to zero in on the 4 or 5 properties I wanted to see and he made the rest happen. He is also great at presenting the pros and cons of any property to help you keep your own excitement from carrying you away. His knowledge of the area was fantastic, and overall made our home buy experience, fast and even fun. Chet Rhodes
Bernie did a superb job of helping us find the right house in Dunkirk. After showing us a few properties, he knew what we were looking for and focused on that. We depended heavily on his experience and familiarity with local practices to guide us through the process. We were impressed with his knowledge of the local market. Once we found the house we wanted, he gave us good advice on negotiating a fair offer. Jack and Fran Shea
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