What is a Credit Explanation Letter & What Do When I Get One | Sample & Template

 When and Why You Need a Credit Explanation Letter When applying for a loan, your lender checks your credit history for negative or derogatory signs like bankruptcy, foreclosures, late payments, among other factors. The lender might ask for a letter of explanation.  The process may appear difficult, but you need to look at it as an opportunity to pass clear information, which might help you get the loan.  Why Lenders ask for a letter of explanation Several lenders ask for your credit explanation letter before approving your loan. Below are some of the most common reasons.  Problems with Your Credit Report  One of the main reasons that lead to your loan qualification is the ability to manage finances. However, if you're not capable of managing finances with signs of missed payments, defaulted loans, and foreclosures, your lender might question your credit history and will ask for a letter of explanation.  The letter of explanation example will give reasons for the negative items on