Explain Your Default to Get a Loan

2010 March 10

There are times when finances are just too tight, and life seems to be using up all your income the moment you earn it.  However, since times are difficult, and money is hard to come by, we want to ensure that the money is well spent.  Hence when there are billing problems, or when we question errors in what we are charged, there is always the possibility of being in default.

The problem with defaults, is that no matter how small it may seem at the time, it may hinder your capacity to gain access to good home loans.  We all know banks and lending institutions are very strict when approving home loans and checking on good or bad credit.  The moment they see a default, the likelihood of your loan application being denied increases greatly.

This is where the default explanation letter comes in.  If you have valid reasons for defaulting in the first place, then you should let the bank or lender know about it.  It may have been because of disagreements in the bill, or disagreements in the interest rates that led to an impasse, or other acceptable items that may tilt the granting of the loan in your favour.

Where there are valid reasons for your default do not hesitate to bring it up with the bank or lender.  This is especially true if your defaulting is the main reason of possible disapproval of your loan.

Do not hesitate to consult the experts on home loans on what the contents of a default explanation letter should be.  They can also advise you if you have a valid reason worth informing the bank or lender about.  This will ensure that you do not waste time with a default explanation letter if you do not need one in the first place.  With their knowledge and expertise, they can ensure that your default explanation letter shall contain all the necessary information to get your home loan approved.

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