What you might not know is this: If your credit history is rocky, you don't have to let the report alone tell your story. Under the Fair Credit Reporting Act, all three credit-reporting agencies (Equifax, Experian and TransUnion) in the United States are required to allow consumers to attach a 100-word statement to their reports.
There is no numerical value associated with such a statement, so it won't affect your actual credit score. If you've had a long history of credit problems or lapses, the statement probably can't do much to help you either.
"An automated credit report review will not take your statement into account at all," says Virginia Sullivan, the director of education for Bills.com. "But in the event of a manual review or a follow-up request, it makes sense to at least outline your case using this tool in case it finds a receptive audience."
A statement will stay on your credit reports for as long as you leave it there. If you want it to be attached to all your credit reports, you'll need to send it separately to all three credit-reporting companies.
"The statement can be a useful tool, if only to make the consumer feel as though he or she has done all they can to rectify a bad situation," says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling. "The statement needs to be succinct and to the point with no editorializing."
Keep in mind that 100-words boils down to three or four sentences. Sample letters on CreditCards.com show how to write a letter that addresses identity theft, a medical emergency, or an error or dispute with a business.
Tips for Writing Your Statement
Be specific. Use dates, names, and other supporting evidence to explain clearly what happened and why it led to your credit being dinged. Sullivan gives this an example statement: "Company X claims they never received payment. I mailed the check on X date and have a copy of the canceled check from my bank. My 3 calls between X date and X date to service representative X have gone unreturned."
Avoid emotion. If a tragedy in your life has led to missed payments for bills, explain simply the nature of the event with the facts and circumstances. You may not want to give potential future landlords a sob story that could negatively influence their decision.
Don't make excuses. No need to get into a long-winded explanation about how your ex-boss was a jerk and that's why you lost your job, or that your brother-in-law never paid you back the money he owed you.
Proofread carefully. Your 100-word explanation will stay on your credit report unless you ask for it to be removed. Everyone who accesses the report will be able to read it, including future employers. Poor spelling or bad grammar won't derail your credit, but it might not help your case either.