Tips to Writing a Letter of Explanation with Credit Problems

Eric Bank reports (sample letters are included):

"Folks can experience financial problems at any time that [they] muck up their credit reports and hamper their access to new credit. However, a well-written letter of explanation attached to a credit application can make a big difference. Many lenders will go the extra mile to accommodate consumers that can explain past problems and offer assurances that the problems have been remedied. But first, it’ll be a good idea to check and see whether you have bad credit at all. When’s the last time you checked your credit score?...The letter must be true...Simply state the facts, including your understanding at the time, the roles others played and, ultimately, why you were unable to pay your bills on time...To the extent that you were at fault, own up to your mistakes. If you truly were innocent or victimized, describe what steps you took and to whom you reported the incident...Blaming your creditor is a very bad idea, since you are trying to arrange credit from, well, a creditor. They will have little patience for a person who trashes one or more previous creditors...Show receipts, letters, insurance policies, contracts and any other documents that will shed light on the problem and support your claims. Always send copies — keep the originals in a safe place...To the extent you made avoidable mistakes, promise to never repeat them again. Demonstrate to your new creditor the lessons you learned and the concrete steps you’ve taken to prevent problems from occurring again...You can always go the easy route and have someone do it for you, like a credit repair service that will also help to get your finances and credit back on track."