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Personal Statements?

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What is the benefit/disadvantage of adding a personal statement to your CRA? One of the options is "I suffered bankruptcy due to business while I was self-employed." which applies to me. I have had more than one lender say they would need a letter or something to that effect. Does this replace that or help in any way? Will it hurt my score? (BK discharged in 02).

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The benefit is that a statement, your right under the FCRA, puts 'your side of the story' into the text of your CR. Many people feel a strong sense of injustice unless they are allowed to EXPLAIN.

The disadvantages are:

Statements have no bearing on any listing in your CR, don't impact your score and make no difference to loan or insurance underwriting, employment opportunities or any other reason your credit gets pulled. Another disadvantage is IF you manage to clear the derogatory TL's attached to the statement, you'd still have the Statement there referring to some (now removed) negative on your CR. For some consumers, getting the statement removed can be more difficult than getting derog data suppressed.

When you're applying for a mortgage loan, many lenders request a letter of explanation for any derogatory items on your CR. This is a requirement of a specific lender (although it's typical for most) and relates to their own underwriting/quality control standards, or possibly to Fannie Mae/Freddie Mac requirements. The letter is an extra document in a loan package and needs to be provided regardless of what exists in your CR, which is another document in the same potential loan package. So, adding a statement to your CR isn't going to short-cut this requirement either.

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