What is a Credit Reference? [+ Examples]

By Lauren Bringle
Published on: 08/10/2021

A credit reference is a document that a borrower provides to a potential lender or service provider to prove their creditworthiness. It typically outlines credit information and other personal information. Borrowers either acquire these references and provide them to lenders or give approval to organizations to share the credit references with lenders.

In comparison, if you’re looking for a job, it’s often helpful to have letters of reference from people you’ve worked with who know you and can vouch for your work.

A credit reference serves the same kind of function. But instead of coming from someone who can vouch for your employment record, it comes from a source that can verify your income. A credit reference isn’t always a letter from a person. Instead, it’s often a form of documentation like a credit report or utility payment record.

What is a Credit Reference?

A credit reference is a type of document that a potential lender and other loan providers review when evaluating a person’s creditworthiness. It helps the potential creditor determine if the individual will pay back the borrowed money.

The longer you’ve maintained a positive relationship with the person or institution providing the personal credit reference, the better the reference will look. That’s true whether you’re talking about a credit record, payments to utility companies, or your relationship with a landlord.

Those are some of the kinds of credit references you can call on, as mentioned below.

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When Do I Need to Provide a Credit Reference?

The most obvious time you might need a credit reference is when applying for a line of credit. Examples include car loans, personal loans or mortgages. But there are other situations in which you’ll need one. Here are three common times when you’ll need to provide a credit reference:

  • Loans — Lenders and loan providers will likely request a credit reference from you to determine whether you will pay back the money that you intend to borrow.
  • Rentals — Landlords or property managers will likely request a credit reference from you to find out if you have a good history of repaying money that you borrowed. Be aware that they may also run a credit check on you. (But renting with bad credit is still possible. Steps you can take include getting a cosigner, putting down a bigger deposit, and of course, building your credit.)
  • Utility services — A utility service provider will request a credit reference from you to determine if you have a good or bad payment history for utility services bills. As the Federal Trade Commission points out, applying for utility services is a form of applying for credit. If you have a poor payment history or a limited one, you may have to pay a deposit in order to get services started.[1]

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Examples of Credit References to Provide

People can obtain various types of credit references when applying for loans.

A personal reference on a résumé can come from a friend or family member. But credit references are provided by institutions who have had or do have a financial relationship with you. That includes any credit card company, banks, investment companies or local lending institutions that have made personal or business loans to you.

While you may have done business with friends or family in the past, it’s unlikely that those agreements would show up on your credit report. Therefore, they may not bear much weight.

It’s kind of like using that you worked in a parent’s shop as an employment reference. It’s better if you obtain credit references from disinterested parties.[2] But if you don’t have any other references, it’s probably better to include these than nothing at all.

Credit report

A credit report is the most widely requested form of credit reference file. A credit report reveals if you have a good credit history or a bad credit history.

Credit reports include things like a history of late payments, defaults, or high credit balances. For example, did you max out credit cards? Or, do you have an insufficient credit history? If so, you haven’t used credit enough to determine what kind of credit risk you are.

Your credit history includes credit accounts ranging from credit cards to car loans and student loans. Take a close look at your credit report for anything that looks like it doesn’t belong there. If you see a major purchase you didn’t make, it could be the result of a reporting error or, worse, identity theft.

It’s important to know how to dispute any errors you may find.

Asset documentation

Asset documentation is a listing of your assets. Lenders consider things like bank statements, savings, retirement funds, stocks, bonds and other investments.[2] The more assets you have, the better you’ll look to lenders because significant assets can demonstrate an ability to manage money effectively.

Adding up your assets creates a picture of your net worth, which can paint a picture of what you have to draw upon to repay what you owe. If you have substantial assets, it can help a potential lender identify you as a good lending risk.

As with your credit report, it’s important to stay on top of your bank accounts to look for signs of suspicious activity. Any reduction in your assets not only affects your finances directly but your asset documentation.

See about signing up for email alerts or app notifications about debits to your account so you can check for anything out of the ordinary. And go through your statements at the end of each month to ensure that everything adds up.

Financier support

Financier support is documentation of how much capital investors have put into a business. It shows their level of commitment to your enterprise.[3] If they’re willing to invest in you, this credit reference file can signal to lenders that you’re a good credit risk.

The more they’ve been willing to invest, the better it looks.

Character reference

Character references can come from a variety of sources. Because they don’t quantify your financial situation the way a credit score, asset valuation or financier support does, they’re not quite as valuable. But they still can be effective.

Sources of character references can include:

  • Former employers
  • Former landlords
  • Former utility service providers

Difference Between a Rental Reference and Credit Reference

Rental references are typically required by landlords and are most closely related to character references. Rental references are just more specific in that they apply to rentals. They are less about financial specifics than providing a history of a tenant’s rental history and reliability.

If a renter has been on good terms with previous landlords, this can be helpful, especially when looking to rent again.

When reviewing a rental application, a potential landlord wants to know an applicant’s behavior and history. A rental reference can help with this, especially with young tenants who haven’t had time to establish a sufficient rental history yet.

If two applicants apply to rent the same property, the deciding factor could be the rental reference, just as the deciding factor between two candidates for a job may be a particularly strong reference from a former employer or business associate.

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Tips for Producing Successful Credit References

Providing successful credit references can involve several steps, along with an awareness of different facets of how to build credit.

First, consistently check your credit report. Under federal law, you’re entitled to a free copy of your credit report once a year. You can order a copy from any one of the three credit bureaus: Equifax, Experian, or TransUnion. It’s also important to know your credit score, as compiled by two companies called FICO® and VantageScore.

A credit score, expressed as a number, is used for individuals and small businesses. It is different from a credit rating, which is expressed as a letter and reflects the creditworthiness of a business or government.[4]

Once you know your credit score, you’ll have a better idea of what to expect from financial institutions and other lenders when you apply for a loan. You can use that in knowing what you’ll need in assembling your credit references. At the same time, you can begin to build credit by taking a variety of steps:

  • Make timely payments on your bills as often as possible, and reduce your debts.
  • Pay off any overdue accounts and delinquencies as soon as you can.
  • Don’t fill out too many credit applications in a short time. Rather, be mindful about how much credit you request. Trying to open too many credit accounts at once can be a red flag that you’re trying to move money around to pay debts you can’t afford. Or, it might mean you made purchases that are beyond your means.

You can also consider getting a secured credit card or credit builder loan to help improve your credit. Then, use character references to your advantage. If you have a negative mark on your credit report, you can provide context to the situation by referring to a past employer or landlord who can vouch for your story.

Don’t try to obscure any details of your credit history. Lenders can check to verify that the information you share is correct. Instead, if you’re worried that certain details in your credit or payment history might be misinterpreted, provide details about why you were late. Good reasons could include a serious illness or an interruption in your employment.

If your loan application is denied, you can ask that lending decisions be reconsidered once you provide additional credit references. If your credit report reflects lots of late payments and bad payment history, you’ll usually have a better chance using a different credit reference.


Credit references can play an important role in securing a loan, applying for utility services or securing a rental/lease contract. It’s important to know your credit score and how to improve it. Learn how to gather all things like asset documentation, financier support and character references.

Once you do, you’ll be in a good position to present your application with confidence.


  1. Federal Trade Commission. “Getting Utility Services: Why Your Credit Matters,” https://www.consumer.ftc.gov/articles/getting-utility-services-why-your-credit-matters. Accessed June 28, 2021.
  2. Experian. “What Factors Do Mortgage Lenders Consider?” https://www.experian.com/blogs/ask-experian/what-do-mortgage-lenders-look-for/#s3. Accessed June 29, 2021.
  3. NerdWallet. “How to Get a Business Loan in 5 Steps” https://www.nerdwallet.com/article/small-business/how-to-get-a-small-business-loan. Accessed June 30, 2021.
  4. Investopedia. “Credit Rating vs. Credit Score: What’s the Difference?” https://www.investopedia.com/ask/answers/110614/whats-difference-between-credit-rating-and-credit-score.asp. Accessed June 28, 2021.

About the Author

Lauren Bringle is an Accredited Financial Counselor® with Self Financial – a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin and Twitter.

Editorial Policy

Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).

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Written on August 10, 2021
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