I’ll Have the LOX

How to write a Letter of Explanation

You may know lox as a delicious topping for a bagel and as hungry as we might be right now, that’s not what we’re talking about. In the lending world, LOX has a different meaning. It stands for, Letter of Explanation and is something you might find useful to help improve your credit score.

Lenders are willing to hear you out and might even go the extra mile to help consumers who can explain previous issues, as well as those who can ensure the issues have been taken care of and no longer remain a threat. So, should you find yourself in a bit of a bind, here are a few tips to help you write your LOX:

  1. State only the facts and be honest.
  2. Include the five W’s of what lead to you falling behind on payment of your bills. This includes, who was involved, what happened as you understand it, when it happened, where it happened and why or how circumstances lead up to the situation.
  3. Don’t be a victim, unless you really were, if that’s the case then describe what you did to rectify the situation. However, if it was your honest mistake, take ownership of it.
  4.  Make a promise, then keep it. You likely made some avoidable mistakes, make sure you learned where you went wrong, how not to do it again and then promise to never repeat them.

For additional ideas on how to improve your credit score check out our previously written blog titled, Achieve Financial Freedom.