A borrower whose loan payments were chronically late explained he had a good excuse: "My wife and I were abducted by aliens and implanted with a device."
Another man, explaining to a mortgage lender why he had a bad credit score, sent a 10-page letter citing a wide variety of reasons, including that he had discovered he was married to the devil. He said he should have know that, though, because his marriage license was number 666. Oh, and he had gout, and had hurt his back.
If you think those are rich, Karen Deis has a million of them.
Deis trains loan originators on direct marketing to consumers. As president of LoanOfficerTraining.com, she keeps underwriters and loan officers current on lending rules and guidelines. Recently she invited her clients to send in the most outrageous excuses they had received from borrowers explaining why they were late with payments, had bad credit scores or were suffering from other blemishes on their credit records.
Choice examples from the list appear below.
Deis is especially fond of a letter written by a woman who explained to a potential lender, "It wasn't my pot pipe that started the fire. It was my boyfriend's." Says Deis, "A lot of this stuff is the truth, unfortunately. Not everybody is an author or can explain themselves very well. That inability affected these people's ability to get credit or to buy a home."
By law, lenders can base their lending decisions only on an applicant's credit, job stability, income and (for mortgages) the amount of cash they have to make down-payments or pay closing costs. But life events like divorce, having to pay child support or having suffered a foreclosure can have a bearing on those variables and need to be explained.
She advises anybody trying to dig themselves out of hole to do two things: First, be sure you can document anything you claim. Second, before you put pen to paper, talk to a loan officer.
A loan officer, she explains, can held a consumer understand what problems or deficiencies matter to the lender and which do not. There's no need to explain the ones that don't. As for the ones that do, it's part of a loan officer's job to help the applicant explain them; he or she can actually help you write your explanatory letter. Chances are, he or she will be more experienced at this kind of writing than you.
Okay, here's a sampling of things not to say—all of them said by real people trying to explain away their credit sins:
-"We decided to pay off our credit card debt and stopped making our house payment for a year."
"I stopped making credit card payments and filed bankruptcy because I didn't want any debt when I buy a house…I should get approved, right?"
"I pay late fees every month, so that should get me a better credit rating."
"My car broke. I stopped making payments. Wanted them to come and get their junk car."
"The construction workers moved my mailbox and could not find it for three months."
"I thought she was payin' it—she thought I was payin' it."
"The bill was always due at a bad time of the month."
"I make all my payments on time…to the collection agencies."
Borrower explaining late payment of Mobil Credit Card: "I got bad gas."
"The stamp fell off my payment envelope."