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What Is a Credit Reference On a Rental Application?

Last updated 03/15/2024 by

Justin Smith

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A credit reference, also referred to as a letter of good standing, is a document that verifies the creditworthiness of an individual or business. Credit references are often used to support rental applications, but they can also be required for loan applications and utility services. Types of credit references include credit reports, asset documentation, character references, and financier support documentation.
We are constantly bombarded with advertisements from companies promising free credit reports in five minutes, or credit scores updated each time you make a purchase. They’ve become so common that it’s easy to tune them out. What if they could actually help get you a job, a loan, or rent an apartment?
Credit references allow lenders to verify and evaluate your financial background, so they can better make a decision on your application. For example, credit references for a rental application are commonly requested by potential landlords. They help the landlord see if you are able to pay rent on time and for the necessary amount. Credit references that include prior landlords can also illustrate whether you are a dependable and respectful tenant.

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What is a credit reference?

A credit reference — also referred to as a letter of good standing — is a document that verifies the creditworthiness of an individual or business. It allows potential lenders to verify things like your income, credit history, and background, which they use in evaluating your application. If you are in debt, or have a poor credit report, your application can be negatively impacted.

When should I use a credit reference?

Credit references are often requested when an individual asks to borrow money from a lender, such as a bank or financial institution, or to use a service. These requests come in different forms, depending on the reason for its use.
  • Utility services. If you are switching utility service providers (gas, electricity, cable, water, or phone services), they can request credit references before beginning service to a customer’s account. This lets the utility companies know whether you’ll be able to pay for services on time.
  • Rental applications. When applying to rent an apartment or other space, landlords will ask for a credit reference as part of the tenant screening process. The landlord wants this information so they can determine whether or not you’ll be able to pay rent.
  • Loan applications. When an individual or business fills out a loan application, lenders require credit references. These references let the lender know whether or not the applicant will be able to pay back the money that’s been borrowed.

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What is a credit reference for a rental application?

Requests for credit references are often part of a rental application and help a potential landlord verify that you have a history of paying rent on time, and for the necessary amount. In addition to checking your credit references, landlords may also check your credit report for further verification of your ability to make timely payments.
For each credit reference, you may be asked to provide the name, address, and phone number of the individual or business. Negative information from your credit references could cause your rental approval odds to substantially decline.

What is an example of credit reference?

A credit reference is a term that covers several different types of documents. The type of credit reference requested depends on the situation for which you are applying, as well as the lender.

Credit report

This is the most common type of credit reference. Credit reports are used by financial institutions, employers, and landlords to track an applicant’s credit history, including their credit score and any debts they might have.
For example, landlords could assess a prospective renter’s credit report to ensure their ability to make timely payments. Insurance companies will also check a customer’s credit report before quoting a price for an insurance policy.
Credit reports are considered the most effective type of credit reference because they offer verifiable information regarding an applicant’s credit history and help to determine a borrower’s reliability.

Pro Tip

Federal law mandates that you can obtain a free copy of your credit report from each of the three credit reporting agencies — Equifax, Experian, and TransUnion — by going to

Asset documentation

These documents are issued by the financial institutions that the applicant uses. Assets can include a checking or savings account, stocks, bonds, and retirement funds. They can help determine the creditworthiness of an applicant.
Individuals with a substantial amount of assets have a greater chance of making their payments on time. It is also a sign of a reliable borrower to lenders.
If a lender asks for asset documentation, you will need to ask the financial institutions that manage your assets to send this information to you. In most cases, you’ll have to supply the asset documentation to lenders yourself.

Financier support

Financier support documents are solely used by businesses — they give insight into a business’s credit history. They are similar to asset documentation in that they are obtained from a financial institution.
Instead of supplying the documents for individual accounts, businesses can have their lenders or investors present a statement of capital. They are considered highly effective credit references.

Character references

A character reference is used to highlight your character and level of responsibility. It is often obtained from previous lenders, former employers, or landlords.
Character references are not considered as effective as other credit references because they do not contain any financial information. However, they do provide context and help explain certain aspects of a credit report that would otherwise give the lender cause for concern.
A character reference can illustrate the ability to manage responsibility, which can be particularly beneficial for individuals who have low credit scores or a history of missing payments.

Pro Tip

Information provided in credit references can be checked and confirmed, so it is better to be as transparent as possible when it comes to things like debt and poor credit scores. Providing false or misleading information can negatively impact the decision of the lender.

Where can I get a credit reference?

Credit references come in several different forms, depending upon the requirements of the lender or service provider. You will want to check the reference requirements before submitting the documents.

Determine what information is needed

The lender requesting your credit reference may provide a template they would like you to follow. Adhering to the requirements of the template will typically improve your chances of receiving a positive response.

Request the credit reference

Send a request to previous lenders you intend to use as your character references. These can include previous lenders, service providers, landlords, employers, or any other reliable individual you plan to use.
Once they have agreed to provide you with a credit reference, send them the template and any useful information to ensure they have the means to comply with the outlined instructions.

Authorize permissions

If you are asked to release information that contains personal information and account histories, you will need to authorize permission so that the lender has access to view this information. In some cases, the lender will contact credit references to confirm the accuracy of certain information.

What are the elements of a credit reference?

The content of the credit reference depends on what it is being used for. The recipient will usually send a template that lets you know exactly what their requirements are. However, the contents of a credit reference are often similar.
For the best chance of your application being accepted, you want to ensure that your credit reference shows as much of the requested information as possible.
  • Duration of the relationship. The duration of your relationship with the person providing your credit reference establishes a timeline and history. This could be the length of time you rented a rental property from a landlord, how long you’ve been a customer of a service provider, or the period of time you’ve had an open line of credit with a bank or financial institution.
  • Payment history. Your history of payment is a record that shows the lender whether you’ve paid on time and for the required amounts. Late payments might be seen as a red flag by the lender.
  • Account numbers. Depending on the type of credit reference, your account numbers could be requested by the lender. This information makes it easier for the lender to track and verify certain details.
  • Payment amounts. Some lenders may want to see whether you are able to make large payments if necessary and how often you’ve made them. This can signal to the lender that cash flow won’t be a problem.
  • Accrued debt. This information allows the lender to see if you have any outstanding debt, and how much debt you still have to pay off. A large amount of debt can be a sign that you might not be able to make all the required payments.

How to help your credit reference letter make a positive impact

There are several ways you can punch up your credit reference letter to improve its chances of garnering a positive response. The more comprehensive and complete a credit reference is, the better chances it has of succeeding.
For example, a strong credit history and credit score, along with good credit references, will significantly increase the approval odds of your application.

Pro Tip

In some cases, you can put up a larger down payment as collateral if your credit references aren’t more positive. If you’re a potential renter, it’s common to offer anywhere from one to three months’ rent in advance. On the other hand, you can find a co-signer to help improve your chances of getting your application approved.

Be aware of your credit report

Frequently viewing your credit report can help you stay informed of any potential errors or fraud. If you see evidence of either of these issues, they should be reported to the appropriate credit bureaus. Errors or fraud on your credit report can lower your credit score and make your application less likely to be approved.

Pro Tip

If you’re confident in your ability to make payments on time, a secured credit card is a good way to rebuild your credit and help improve your credit report.

Submit a reconsideration request

If your application is rejected, the Fair Credit Reporting Act requires the lender to send you what is known as an adverse action letter. This letter will explain the reasons your application was denied, the credit bureaus involved in the rejection, and which of your credit scores were used.
You can use the information outlined in the adverse action letter to ask for a reconsideration of your application. To do this, send the lender additional character references and any other documentation you think will help the lender overturn their decision. This is your opportunity to explain in further detail any factors and extenuating circumstances that might have led to the rejection of your application.

Sample credit reference letters

A credit reference letter can contain a number of different details and take various forms. They don’t need to be lengthy, as long as they meet the credit reference letter requirements.
[Name] has been a client of ours for the past fifteen years. During that time, they have always made payments in a timely manner, and there has been no record of late payments. [Name of business] applied for a line of credit with our bank in 2005 and was approved for $200,000. The current amount owed on that line of credit is $4,542. We have received all payments in a timely manner, and all payments have been made in full. There have not been any reported instances of late or missing payments by the client.

Key Takeaways

  • A credit reference is a document that verifies the creditworthiness of an individual or business.
  • Credit references are often used to support rental applications, but they can also be used for loan applications and utility services.
  • Types of credit references include credit reports, asset documentation, financier support documentation, and character references.
  • The elements of a credit reference include the duration of the relationship, payment history, account numbers, payment amounts, and accrued debt.
  • To help your credit reference gain a positive response, frequently review your credit reports to assess any potential errors and address negative items.
  • If your application is rejected, you can submit a reconsideration request where you can explain aspects of your application that might have led to its rejection.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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