Help on writing statement to CU explaining 2 CC charge-off's on my credit report?

[Anonymous]

Any advice on writing the statement?

I'm 99% approved for an auto refi at my credit union, just need to fax pay stubs and a statement explaining why 2 credit cards are listed as charge-offs on my CR.

The reason I have the charge-offs is because I was just plain stupid. I want to be honest and tell them I didn't know what I was doing w/credit, didn't have the money for payments at the time, etc. so should that be ok? I've only been a member with the CU for 8 months and want to establish a good relationship w/them so I don't want this statement to make me look too bad. (I have perfect payments for the cc I use now.) 

Thanks.

[Jazzzy]

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@Anonymous wrote:

Any advice on writing the statement?

I'm 99% approved for an auto refi at my credit union, just need to fax pay stubs and a statement explaining why 2 credit cards are listed as charge-offs on my CR.

The reason I have the charge-offs is because I was just plain stupid. I want to be honest and tell them I didn't know what I was doing w/credit, didn't have the money for payments at the time, etc. so should that be ok? I've only been a member with the CU for 8 months and want to establish a good relationship w/them so I don't want this statement to make me look too bad. (I have perfect payments for the cc I use now.) 

Thanks.

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Hi...have you paid these charged-off accounts? I ask because if you have paid them, that should be included in your explanation.

[Anonymous]

No, haven't paid them off.

[Jazzzy]

In that case....you said you want to be honest with them...tell them what you told us. If there were other factors going on at that time such as that you were making a lower income, or job loss, or anything of a hardship nature, be honest with them about that, too. Tell them you got yourself overextended.

The best thing you can do is take full responsibility for your actions. If there was any hardship around that time, still take responsibility for not resolving the debt later. In these cases, the worst thing you can do is blame someone or something else.

I don't know if you've done any readings on the various forums here, but you may be at the point that you want to work with these charge-offs and try to pay them (or agree on a settlement amount) and pay them in exchange for them being deleted from your credit reports. That way you won't have to ever deal with them again.

[Anonymous]

Thanks for your advice Lynette. Much appreciated.

[RobertEG]

It all depends upon the CU evaluation of your current income/ability to pay the new loan versus your prior major derog history of paying.  I think you will need a very, very forgiving CU on this one.

To be very honest, I think it is a Forrest Gump defense. 

Yeah, you may have have been stupid on knowing the harm to you in your FICO score, but, putting yourself into the mind of the CU lendor, how would that excuse your self-concern for not making whole on the debt owed?  Letting it reach major derog status, and yet still unpaid?

You can take you chances and plead stupidity, but I, as a lendor, with two unpaid, major accounts, and a potential in-writing admisssion of stupidity, would not be inclined to lend.

[Anonymous]

Different lenders have different criteria.

However, no lender likes to see unpaid past accounts.  And an explanation generally is considered acceptable when it was due to financial hardship for uncontrollable circumstances or for life events beyond control.

When one states "stupidity" often that stupidity may mean you cannot get prime lenders and have to go with the subprime.  Otherwise prime lenders may expect you to pay the past obligations first.

If you had a period of bad finances, that can be overlooked if once you got back on your feet you took care of it.  But when it was financial indiscretion followed by an unwillingness to pay....you just have to see what they say.

On the positive side, if you have enough positive since then and good income, then you might get the loan since it is a secured loan if the loan to value is inline.

Good luck.

[Anonymous]

Just updating my situation... In the short statement that I wrote I explained I wasn't as knowledgeable about credit then as I was now, I had a sudden reduction in household income at the time (2 incomes down to 1) plus I was making less $, I was overextended, I intend to repair my credit, etc. All complete honesty.

I was approved for the refi. I went from 19% interest to 7.75% interest.

Thanks all for your advice.

[Jazzzy]

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@Anonymous wrote:

Just updating my situation... In the short statement that I wrote I explained I wasn't as knowledgeable about credit then as I was now, I had a sudden reduction in household income at the time (2 incomes down to 1) plus I was making less $, I was overextended, I intend to repair my credit, etc. All complete honesty.

I was approved for the refi. I went from 19% interest to 7.75% interest.

Thanks all for your advice.

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Congratulations!

Credit repair is hard work, takes time, and can be very humbling.....

....but...wow....it sure feels good.

[Anonymous]

Congrats!

IMO, if you were able to afford the previous payment at 19%, then make wise use of the savings by adding it to your emergency fund (if underfunded) or by applying it to your highest APR debt.  Don't use it as discretionary money....put it to valuable and wise use.

IMO