An AKA, or ‘Also Known As’ letter is one where the individual confirms a name variation has been used in the past. Lenders need to know exactly who they’re providing a loan for and during the course of receiving a loan application and reviewing a credit report, there can be more than one name listed on the report. How is that so? It’s really very simple. Over the years, someone who has applied for credit somewhere signs the application. An authorization form is also signed which gives the lender permission to do some research about the background of the applicant.
A credit reports contains a surprising amount of information collected over the years. Besides the payment history, balances and a list of accounts, there is more information. Where the person has lived will be included in the report. This can mean a first apartment rental. Later, a first house. Still later, another home. Each time the individual applies for credit, the address at the time of application is included in the credit file.
Here’s how it works. Robert Smith filled out a lease application while in school. Upon delivering the application, the landlord pulls a credit report using the name Robert Smith. That would be the first name entry in the credit report. Later, when Robert graduated, he applied for a new car loan when he got his first job. His application read Bob Smith, because that’s the name he goes by. ‘Robert’ is too formal, he thinks. At this stage, the report has two names listed, Robert Smith and Bob Smith. After a few months, he applies for his first credit card and when doing so he lists his full name, Robert James Smith. Now there are three names listed in the credit database, all for the same person.
Women who marry and take on their husband’s name can also have more than one name listed in a credit report. Jane Smith marries John Doe and takes on the husband’s last name. She now goes by Jane Doe. This is a little different than Bob Smith’s situation. Bob keeps the same last name and is consistent throughout. Jane however, takes Doe for her last name and now her credit report shows Jane Smith and Jane Doe. Sometimes she applies for a credit account and uses her full name before and after marriage. You can already tell it can be a bit confusing making sure the applicant listed on the loan application is the real one.
When there is more than one name variant on a credit report, the mortgage lender will ask for an AKA letter. The letter is fairly straightforward. Bob will state that he has gone by other names in the past, those that are listed on the credit report. Jane will fill out a similar letter. This is nothing more than validating the identity of the applicant.
Finally, there can also be names on the report that do not belong to the applicant. This happens more often with more common names, such as Robert and Jane. Perhaps the name ‘Bob Jones’ appears on Bob Smith’s report. If that’s not our Bob, the letter will state that he has no idea who Bob Jones is and that’s not him. The letter will identify the right Bob. An AKA letter is nothing more than the lender making sure the thousands of dollars about to be wired to fund the mortgage is going to the right person.
