Letter of explanation

Ayslynne

Hi all,

I've read in a few threads about people being asked to provide a letter of explanation when going through the mortgage application process to explain any past credit problems.

I have payday loans from 2013 on my credit file and 2 defaults from 2014 (small amounts) which were on credit that I got in 2013. All of these problems happened at once due to a drop in hours at my old job.

I'm wondering if anyone has done this or thinks it would be helpful to write a letter of explanation in advance to the lender we will be using?

We've had an AIP from Halifax and from Royal Bank of Scotland.

Thrugelmir

Are you using a broker? As they would be best placed to advise you of which lenders will consider your application. Letters by themselves don't override lenders criteria and policy. In borderline cases explanation may be requested from the applicants to clarify .

ACG

Some lenders will want an explanation, not all do.
It only needs to be a paragraph it does not need to be war and peace or anything. Follow the lenders lead if you are doing it yourself.

AnotherJoe

I'm wondering if anyone has done this or thinks it would be helpful to write a letter of explanation in advance to the lender we will be using?

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Absolutely not. Why poke a stick into a wasps nest?
Wait until asked, rather than warn them upfront. They may never ask or notice.
You may think it's a good idea to explain the extenuating circumstances. To me, that looks like a warning that you are in danger of having working hours cut, and that if that happens you are living on a knife edge financially which would make you a poor choice to lend to,

csgohan4

As long as your honest and upfront to your broker and the lender when asked, there shouldn't be a problem with your broker finding the right lender for you


Some people on here try to defraud the lender by lying which is not a good thing for getting a mortgage, ever.

Ayslynne

Hi everyone

Thanks for your replies!

We aren't using a broker as I've found the ones I've tried to be very unhelpful! So we are doing this process ourselves.

I'll be honest at the application stage and then see what happens from there. I started a full time job in January 2014 and there's no possibility of any reduction in hours or anything that was only in my previous job at Tesco.

Thanks again!

Ayslynne

Just wanted to check can adding a notice of correction be helpful?

I've just noticed this on my experian credit report that noticed of correction can be added to add background information.

Senior_Paper_Monitor

Do not use 'Notice of Correction' - brings nothing to the party and means any credit application will be referred.

ACG

100% agree with the above, do NOT do a notice of correction.

The easiest way I can think to explain this is lenders systems know how to read credit reports as apart from the companies names, it is all numbers, a computer can understand it.

As soon as you add a note, the computer automatically throws it out for an underwriter to review as the computer can not read it.

So a case that may automatically go through without touching the sides gets thrown out. I am not necessarily saying that will impact on the overall outcome but it will slow it down.

Ayslynne

Thanks both - will leave it as is and see how it all goes.

Thanks again for all the advice.