Letter of Explanation for Credit Inquiries — Free Template
Hard inquiries in the last few months make underwriters wonder whether you've taken on new debt they don't know about. This version is set up to explain credit inquiries: list each one, say why it happened and confirm whether a new account was opened.
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Free to preview[Your full name (as on the application)]
[Your current address]
October 15, 2026
[Lender or underwriter]
Re: Letter of explanation — the recent credit inquiries on my credit report
Dear [Lender or underwriter],
Thank you for reviewing my application. As requested, I am writing to explain the recent credit inquiries on my credit report.
[Your explanation]
[Current status and why it won't affect the loan]
I confirm that the information in this letter is true and complete to the best of my knowledge. Please let me know if you need anything else to complete your review.
Sincerely,
[Your full name (as on the application)]
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List every inquiry the lender named
Underwriters typically ask about hard inquiries from the past 90 to 120 days, and they'll usually list them by creditor and date. Address each one by name, even if several were for the same purpose. Unaddressed inquiries usually come back as a second request, which slows things down.
For each inquiry, say what you applied for and the outcome: no account opened, application denied, or account opened with its limit or balance and monthly payment. If an account was opened, the lender will likely add it to your debts, so give accurate terms.
Rate shopping and inquiries you don't recognize
If several inquiries came from shopping for a single loan, such as a car loan, say so. Credit scoring models generally treat multiple auto or mortgage inquiries within a short window as one, and underwriters understand rate shopping. Explain that you were comparing offers for one loan and which, if any, you took.
If you don't recognize an inquiry, say that plainly. It may come from a lender with an unfamiliar parent company name, or it could be an error or a sign of identity theft. Check your full credit reports, and if it's not yours, dispute it with the credit bureau and tell your loan officer.
What to do, step by step
Read the underwriter's request closely
Lenders usually list exactly what they want explained, such as specific inquiries, deposits or dates. Answer each item they named, in the order they listed them.
Gather supporting documents
Back up your explanation with paperwork where you can: a bill of sale, a gift letter, an offer letter, a payoff statement or a hospital bill. Underwriters can't approve on your word alone.
Fill in your letter
Answer the questions above. Keep it short and factual: what happened, when, whether it's resolved and why it won't affect your ability to repay.
Sign, date and send it back
Sign and date the letter, add every borrower's signature if the item concerns both of you, and upload it through your lender's portal or send it to your loan officer.
Respond quickly to follow-ups
Underwriters sometimes ask a second question after reading your letter. Answer promptly to keep your closing on schedule.
What if the underwriter isn't satisfied with your explanation?
A letter of explanation is a routine part of underwriting, not a sign that your loan is in trouble. If the underwriter needs more, they'll usually ask a follow-up question or request a specific document. Answer the new request directly rather than rewriting your whole letter.
If the item reveals something that changes your loan, such as a new debt from a credit inquiry or a deposit that turns out to be borrowed, the lender may recalculate your debt-to-income ratio or ask for more documentation. Being upfront from the start avoids surprises at closing.
If your loan is denied, ask your loan officer for the specific reason. Sometimes a different loan program, a larger down payment or waiting a few months to add more history solves the problem. Never change facts to fit the lender's requirements; misstatements on a mortgage application can have serious consequences.
Example letter of explanation for credit inquiries
A filled-in sample with made-up details, so you can see the finished result.
Priya Raman
2215 Juniper St, Apt 4B, Denver, CO 80205
October 5, 2026
Front Range Home Loans Underwriting
Re: Letter of explanation — the recent credit inquiries on my credit report
Loan or application number: Application 2026-48817
Dear Front Range Home Loans Underwriting,
Thank you for reviewing my application. As requested, I am writing to explain the recent credit inquiries on my credit report.
The item in question: inquiries from Summit Auto Finance on July 9, 2026, Peak Bank on July 11, 2026 and Horizon Card Services on August 2, 2026.
The inquiries from Summit Auto Finance and Peak Bank were made while I compared auto loan offers over a few days in July. I decided to keep my current car and did not accept either loan. The inquiry from Horizon Card Services was for a store credit card I applied for at checkout; I was approved for a card with a $1,000 limit.
No auto loan was opened. The Horizon card has a zero balance and I have no plans to use it. I will not apply for any other credit before closing.
I have enclosed the following documents to support this explanation: a current statement for the Horizon Card Services account showing a zero balance.
I confirm that the information in this letter is true and complete to the best of my knowledge. Please let me know if you need anything else to complete your review.
Sincerely,
Priya Raman
Frequently asked questions
Why does my lender care about credit inquiries?
Each hard inquiry means you applied for credit. If that led to a new loan or card, it could increase your debts and change your debt-to-income ratio. The letter lets the underwriter confirm whether any new debt exists before approving your mortgage.
Do soft inquiries need to be explained?
Usually not. Soft inquiries, such as checking your own credit or promotional prescreening, don't come from credit applications and generally aren't shown to lenders. Underwriters focus on hard inquiries, which appear when you apply for credit.
What if an inquiry came from my mortgage shopping?
Say so. Inquiries from other mortgage lenders you contacted while comparing rates are normal. Name the lenders and confirm that you're not taking a second mortgage or other loan from them.
What is a letter of explanation?
A letter of explanation, often shortened to LOE or LOX, is a short written statement a lender asks for when something in your application needs context, such as credit inquiries, late payments, a large deposit, a job gap or a change of address. The underwriter adds it to your loan file.
How long should a letter of explanation be?
Usually a few short paragraphs. Answer exactly what the underwriter asked, give dates and amounts, say whether the issue is resolved and attach proof. Extra detail can raise new questions, so stay on topic.
FairLetter is not a law firm and does not provide legal advice. Letters are templates you customize and send yourself.