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Federal regulations require that lenders prove they have verified your ability to repay the loans they make. A letter of explanation may provide the extra documentation needed to: Clear up any discrepancies on your credit report, like late payments or cosigned loans.
An explanation letter at work is a formal printed letter or email written to explain something that occurred, to answer an inquiry or provide missing information. Clients, contractors, team members or students may write this type of letter to provide information and inform other individuals about situations.
A letter of explanation is a brief document you can use to explain anything in your financial or employment documents that might make an underwriter pause, like a previous bankruptcy.
Top 5 Explanation Letter for a Mistake at Work Writing Takeaways Take responsibility for your actions. Be clear about what you did or didnt do that caused the mistake. Avoid focusing on anyone elses role in the mistake. Provide a little backstory. Outline a plan. Clearly apologize.
Derogatory marks are negative, long-lasting indications on your credit reports that generally mean you didnt pay back a loan as agreed. For example, a late payment or bankruptcy appears on your reports as a derogatory mark.

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There is also something known as a letter of explanation for derogatory credit. You have to submit this type of letter if there are any problems with your credit report. Most of the time, the issues are very minor such as a discrepancy in the personal information given.
The key to writing a great letter of explanation is to keep it short, simple and informative. Be clear and write with as much detail as you can since someone else will need to understand your situation. Avoid including irrelevant information or answers to questions the underwriter didnt ask.
Take a look at some of the best business letter closings you will come across. 1 Yours truly. 2 Sincerely. 3 Thanks again. 4 Appreciatively. 5 Respectfully. 6 Faithfully. 6 Regards. 7 Best regards.
Relax Dont worry too much about a letter request. All you need to do is look for what they want to verify and then provide an answer. Keep your answer simple and to the point and wait to see if its enough. Dont assume that youre not going to get a loan because an explanation was requested.
Most explanation letters are just used as a way to connect the dots, and when thats done the underwriter is satisfied with the information provided. Then they can move forward with underwriting and approving the loan, and the borrower can get the home they were hoping to buy.

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