Credit problems are generally a sore topic of discussion. However, if you are seeking a loan or an extension of new credit, your lender will need to clarify whether you are prepared to make timely monthly payments. A letter that describes your prior credit hurdles and the corrective actions that cleared your financial obstacles could explain derogatory marks on your credit report.
Issues
A credit letter should describe specific credit issues or challenges that impact your financial situation. Your credit issues may include past-due credit cards, late mortgage payments, medical bills, student loans or late auto loan payments. Your issues may involve a combination of credit problems that a well-written credit letter should mention.
Cause
The reasons for your credit problems may stem from a medical emergency that required a surgical procedure and caused a gap in your regular payroll earnings. You may have lost your job due to an employer that decided to downsize and the loss of income caused a financial hardship. Your savings or financial reserves may have been exhausted in an attempt to better manage your obligations. A credit letter should include an explanation of the circumstances that led to your credit problems.
Impact
Credit problems can have a huge impact on an individual's financial situation. As credit gets progressively worse, it might become more difficult to receive help. The impact of some credit problems could lead to the closure of revolving credit card accounts, foreclosure for severe mortgage delinquency, an automobile repossession, judgments or bankruptcy. A letter that details the hardships that you have endured as a result of credit problems might give the recipient a better understanding of your situation.
Help
Credit help could provide assistance toward managing your debt. You can provide a letter that enables a credit counselor to review some options for improving your situation. In some cases, a credit counselor could help you prepare a letter that provides an overview of your credit problems.
Resolution
A credit letter should explain the method used to restore your credit or provide your plan for resolving outstanding credit issues. Your credit letter should detail information that may better prepare you for future obligations, such as increased earnings or a financial cushion that covers several months of your expenses.
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