Writing a Letter Explaining Bad Credit [Free Sample]

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With the economic woes faced by many, having bad credit is not an uncommon occurrence. There are companies that cater to those with blemishes on their credit report.

While they may charge higher than average down payments and the interest rates are predatory, they still offer those with less than perfect credit an opportunity to get a loan. 

lenders wants an explanation

Some lenders want an explanation as to why the credit score has tanked, even if a person has rebounded. Explaining what happened during this time, could be the difference between approval and denial. 

Lenders will accept a person saying that they had a medical condition that kept them from working far better than they would a person’s blatant irresponsibility. However, be careful what is put in writing, they may ask for verification of this issue.

Type Of Communication

This type of communication is done with a formal statement in the form of a letter. This statement is made by the person seeking a loan, to satisfy the lender. 

Since some lenders will want verification of the story they are being told, it can speed things up to attach doctors’ bills or a prescription history. Just give them something to make the story creditable.

Remember, they are loaning sums of money, sometimes in great amounts. They want to make sure that they are not going to have a debt that will end up uncollectible. 

That is why they make the interest rates higher and the down payments on purchases more significant than other loans.

They want to be sure to recoup some of the money up front and they charge more for taking a big risk. 

This is why some lenders won’t deal with those who have blemished credit, it’s too big of a risk.


One of the biggest types of loans to obtain is a mortgage. Big name lenders, like FHA, require a statement to back the loan. 

Because they cater to someone who may have had a bankruptcy in the past or had hard times previously, they want some verification.

To type this letter, start with the person’s name, address and date, then follow with the lender’s name and address. 

If there is a specific contact person, their name should be listed on an attention line. Address them formally as, “Dear Mr. or Mrs.”, never use first names.

First Paragraph

The first paragraph should talk about the type of loan the person is seeking and the amount. If it is for a house, be sure to put in there how this is a dream come true. The lender needs to be able to connect with the purchaser on an emotional level.

Pulling at their heart strings a bit doesn’t hurt at all. Loan officers know that if someone is emotionally attached to a car or home, they will make sure the payment comes first.

Though it should be stated in the first paragraph what the credit trouble was in general. The second paragraph is where the specific details can be listed. 

Don’t be afraid to say the whole ugly truth. Lenders don’t want someone to tell them what they want to hear, they want the truth.

Again, referencing and attaching documentation further proves the case. Anyone can get sick, or have a spell where they are down on their luck. 

It is what a person does after these times that is important to potential lenders. Here is a sample bad credit verification letter that can be used to get a loan.

Sample Letter Explaining Bad Credit

Jennifer Long
7806 Silver Bell Way
Baltimore, MD 43195

May 20, 2022

AB Lending Company
829 Gold Drive
Largo, MD 43083
Attn: James Green

Dear Mr. Green,

This letter is written in response to the request for verification of the period bad credit by your lending institution. 

The loan in question is for a home on Mystic View Turn in Columbia. My family is quite large, we have children, and we have been renting.

Our current accommodations are too small and my children long for a yard to play in. This house we are wanting to purchase would be the perfect starter home for us. 

I understand there is some question about previous credit problems. I am sure we can address those issues and put the lender’s mind at ease.

In 2017, my husband was stricken with some serious illness. He began to have seizures and at times didn’t know who he was. 

He was in the hospital more than he was out. For two years, I had to carry the financial burden of the family. 

He was life lighted two times and it is a miracle that he is with us today. He has made a full recovery and is doing well. 

This temporary setback was the cause of great financial turmoil in our lives. Thankfully, he has been back to work for 3 years and we have made a full financial recovery.

If your lending institution is kind enough to grant this loan, we will ensure that timely payments are made. If you have any questions, please feel free to contact me at 545-896-5174.


Jennifer Long

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