Credit Explanation Letters. Do They Work?
Credit is certainly a critical component when VA lenders process a home loan application. The VA requires lenders to determine whether or not the veteran has been responsible with their credit by making their credit payments when due. The credit report will reflect account balances, the minimum monthly payment required and if any payments are more than 30 days past the due dates. Credit scores will also reflect payment patterns.
Sometimes though there’s simply a disagreement between a creditor and a borrower and unfortunately mistakes are relatively common in a report and this results in a lower score and to correct that the consumer is urged to fix the mistake or write a letter to the credit agency explaining the borrower’s side of the story.
For instance, a borrower made a payment on time and has a cancelled check to prove it. In the case of a mistake, the creditor can review the information and remove the late payment from the report. Or a borrower has an outstanding balance due on an account but the borrower claims the information is in error but can’t back up the claim. In either case, the borrower is told to write a letter to the credit agencies explaining why you don’t feel you owe anything more.
Unfortunately, a credit explanation letter does little good. In fact, credit scores ignore them altogether. If a score is low and can’t be fixed due to error, however convincing a letter may be, the letter wont’ do any good to change a score.