Rental application what is a credit reference

Several documents can be used as a credit reference. Here are the most common types of credit references:. The most common and important document used for credit references is a credit report. Credit reports are the foundation of credit scores. Almost all lenders use credit reports to calculate the risk associated with approving loans. Other entities may also request credit reports. Insurance companies also may look at a credit report before providing an insurance policy quote.

Besides credit reports, asset documentation is another document that serves as a credit reference. Assets can also indicate the financial worth of a potential applicant.

If needed, you may ask your financial institution to provide these records to prospective lenders on your behalf. Financier support documentation is also used as a credit reference. Instead, it shows the value of a business entity.

An applicant who runs his own business can provide documentation that shows he has access to capital through his business. Business owners who need credit references may ask their investors to provide statements that show the amount of capital available to the business.

Another credit reference is a character reference. These references serve to prove that you have a history of paying your bills on time and won't be a financial risk to the landlord. During the screening process, the landlord will contact your credit references to get an overview of your credit history and detect delinquencies such as collections accounts or late payments. This information will help the landlord make such decisions like whether he will charge you a large deposit , require multiple months of rent upfront or rent to you at all.

While your landlord might call the reference, it's also possible he'll request a credit letter reference instead. A credit reference can be anyone who has given you credit or otherwise had a financial relationship with you. Examples might include your credit card company, local bank, investment firm, previous landlord or a local business that gave you a payment plan.

Wallet Hub also suggests that documentation showing your assets , like cash in the bank, could be a potential credit reference as well. If you've borrowed money from a friend or acquaintance , you may be tempted to use the person as a credit reference, especially if you set up a formal agreement. But since this loan would likely not show up on your credit report, keep in mind that landlords prefer documented credit information and may not weigh the personal loan the same as a traditional bank loan.

If you do lack a credit history, though, you might consider this option rather than listing no credit reference at all. Your credit report lists your open and closed accounts with details such as the number of payments made on time or late, the contact details for creditors, bankruptcy filings and any accounts sent to a collections agency. Having no credit history, limited references or a bad credit history can all have a negative impact on your rental application.

The landlord might not feel comfortable renting to someone who doesn't have evidence backing up that she can pay rent regularly. The requester will usually provide a form that must be completed by the reference letter supplier. If you do not receive a template, ensure that the letter contains the letterhead of the issuer. Key information that is often requested in a reference letter includes the following:. The capacity of your relationship with the letter issuer; for example, the individual may have issued you a line of credit, supplied your cable, or rented property to you.

Payment details such as whether you usually make payments on time and for the necessary amount, or if your payments are late and not for the necessary amount, for example. The information that a credit reference letter contains depends on the individual requirements of the individual or company that is requesting the letter. A credit reference letter does not need to be lengthy; it just needs to meet the requirements of the letter requester and contain the necessary information.

Name of applicant has been our customer since In that time, he has made timely payments for the appropriate amount. No records of late payments or missing payments have been filed. Name of Organization has been working with us since The organization has purchased supplies from us on a steady basis and has made timely payments for all supplies purchased.

The account of this organization has never been suspended for any reason. Name of Company applied for a line of credit with our financial institution in To date, we have received all payments in a timely manner, and all payments have been made in full.

No late payments or missing payments have been reported. If you are applying for a loan, a rental property, you require the service of a company, you are applying for a job, or you are doing anything else that requires a credit reference, your goal is to receive a positive response. A credit reference can either help or hurt your chances of receiving the results you want. The following tips can improve your chances of a positive outcome. Before issuing any information, make sure you find out exactly what type of information the credit reference requester requires.

Failing to include necessary details can harm your chances of a positive response, even if your credit is in good standing. If a deadline is provided, make sure you collect all requested information far in advance.

If your credit references do not paint a positive picture of your creditworthiness, try to clarify any mitigating circumstances. If your credit score shows late payments as a result of losing your job or illness, make that clear and supply supporting documentation.

Do not attempt to hide anything. When it comes to credit references, the information can be checked and confirmed.

Falsifying information can negatively impact the decision of your lender, landlord, or service provider. The more transparent you are, the better your chances of receiving a positive response. The best credit cards for no credit history.

The best secured credit cards in How to get a credit card without a social security number. How to use credit cards to build credit history. How to build credit in the US. How to get a social security card. How to get an apartment with no credit history. No credit check cell phone plans. Home Resources What is a credit reference? Definitions and examples. What is a credit reference? Definitions and examples Credit references are documents that show the credit history of loan applicants and are also often used to support rental applications.

Building Credit. When you need credit references Credit references are requested when an individual requests to borrow money from a lender or to use a service.