What is a Credit Reference?

Updated on April 9, 2024

At a Glance

  • Credit references are used by lenders and service providers to assess creditworthiness.
  • Types include credit reports, asset documentation, financier support, and personal character references.
  • To secure, confirm requirements, request references, and grant permission to share personal information.
  • Reference letter includes details about account type, relationship length, payment history, and outstanding balance.

Are you in the process of applying for a business line of credit? Or are you perhaps applying to rent an apartment? Whether your endeavors have a personal or business nature, applications for credit or credit-related services require a credit reference.

What is a credit reference? We’ll explain exactly what it is and also add some more useful tips. When you are done with this article you will have a good understanding of what a credit reference is and how to get your own credit reference.

What is a Credit Reference? 

Lenders engage in a risky business. They offer to lend money to borrowers and run the risk of never actually having the loan repaid. Lenders use various tactics to reduce the risk. They use all kinds of methods to determine the likelihood that a specific borrower has the ability to repay the loan in question.

So what is a credit reference then? A credit reference is one of the methods lenders and service providers use to determine a borrower’s creditworthiness. A credit reference is a type of reference letter from a person or business’ creditors (institutions they owe money). It’s not only from creditors. A credit reference could also come from a company that manages the applicant’s assets. We’ll look at the different credit references below. For now, you need to know that a credit reference is a statement or reference letter confirming someone’s creditworthiness.

How Does a Credit Reference Work?

Most credit references start with a request from the lender, creditor, or service provider you are applying with. You apply for something and then the lender might ask you for credit references. Here is a description of each step you can take to get your credit reference. Credit references could also help if you don’t yet have an international student credit score.

Check with the Lender for Instructions

Ask your lender what type of information they require. Details such as the size of your accounts, payment histories, or the age of your account might be relevant. The lender requesting your credit references will probably be able to provide you with an example that you could then give to your credit suppliers. This will help you get the correct format from the beginning and minimize any loss of time due to small errors.

Choose Your Credit Reference Provider

You need to choose which service provider you get your credit reference from based on the type of information required by the lender. Let’s say for instance you can only use references with whom you have an account for more than a year. You can then only ask for references from service providers with whom you have an account that fulfills this criteria.

Also, choose the references that help your cause the best. Don’t lie, but there is nothing wrong with supplying your best credit references to improve your chances of success.

Supply Permission to Release Your Personal Information 

You are handing over personal information to your lender. Before this is allowed your service providers creating the credit references will first ask for your written permission to release your personal information. Some lenders may contact your referrals to verify the validity of the information. Your referrals want to have your permission before they are allowed to engage in such a conversation regarding your personal information.

Make Sure This Information Is Included 

Go through the criteria set out for your credit references and make sure you comply with every requirement. Include all kinds of information about your accounts like:

  • account limits
  • account ages
  • payment histories.

Remember you want to create a good image of your creditworthiness. So, submit the information that confirms you pose a low risk as a borrower and that you can borrow money and repay it successfully.

Types of Credit References? 

You already asked, “what is a credit reference”? But do you know the types of credit references? Here follows a short description of each type of credit reference. A credit reference like this could serve as a type of credit score without SSN.

  • Credit report – The major credit bureaus in the U.S. keep track of your credit transactions. They can provide a trustworthy credit reference. Some credit bureaus may offer a free annual credit report. Get yours and supply it as a credit reference. Credit reports only report the information which is reported to them. This method is highly effective but you could still get more information from different sources we’ll look at next.
  • Asset documentation – Perhaps you have investment accounts that aren’t listed on your credit reports. Ask your asset managers and/or brokers to create a credit reference out of your asset documentation. It helps to quantify your net worth and could help support your creditworthiness as you apply for credit at lenders. This type of information is also highly effective as a credit reference.
  • Financier support – Businesses in need of credit references regularly use financier support as a solution. The support from investors and shareholders could also help create a credit reference. The available capital backing your business could help prove your creditworthiness.
  • Personal character reference – As the last method, you could also appeal to the emotional side of your lenders. Personal references from friends and family could also serve as credit references. These statements could attest to your character and values which may confirm your creditworthiness. It could also help explain any discrepancies in your financial history. This method is unfortunately not too effective. It may help to serve your cause but lenders don’t rely on it too often. 

The above-mentioned methods could help you submit successful credit references. You can always use a combination of these methods to improve your application’s likelihood of success. Use it wisely to cover every criterion required by your lender. Now we’ll look at some more tips regarding credit references.

Credit Reference Tips

Here are a few tips you can employ to build healthy credit references:

  • Know your credit score – Check your credit score regularly (at least annually) to monitor its progress. You can’t improve something if you don’t know its condition. A credit score is your best credit reference. It’s a combination of your creditworthiness and your credit history. In this one metric you can prove much about your ability to repay a loan. Some lenders may only take your credit score into account when reviewing your application for credit. Stronger credit scores lead to a higher probability of successful credit applications.
  • Save your arrows – Don’t use the same credit references too often and only use the best references for the applications with a higher value. You don’t want to run out of references when you really need it. Lenders may contact the financial departments of your references and you don’t want to burden them with regular requests about your creditworthiness. 
  • Use references to explain – Some credit references could help to explain any issues in your financial history. Perhaps a mistake is noted on your credit score. Ask the lender who reported the faulty information to the credit bureaus to confirm the error in a credit reference. This method could also help give context to similar situations which could be resolved by a credit reference.
  • Use references to request reconsideration – Perhaps a lender denied your application based on a particular set of information. Use a credit reference that contradicts that information with proof as a way to request a reconsideration. A credit reference will not only support your creditworthiness, but it may also help your applications to be reconsidered.
  • Choose the best – Depending on the type of application, you must submit the best credit references for the situation. A big value application requires your references with the highest account limits. Also, choose references (businesses) who have excellent creditworthiness.

How to Secure a Credit Reference Letter

Now, when someone else asks – “What is a credit reference?”, you’ll be able to answer them. But do you know how to get one? Here follow the steps required to get your credit reference.

  1. Confirm the requirements – Use the example provided by your lender to verify the correctness of your credit reference. Make sure it complies with the criteria determined by your lender to improve your likelihood of success.
  2. Request credit references – Ask your previous employers, landlords, creditors, and/or service providers for credit references. Supply them with the lender’s credit reference example or demands and make sure it conforms to the required format.
  3. Grant permission – Grant them permission to share your personal information. Without it, they may not release your credit reference since it could look like an unauthorized leak of your information.

What’s Included in a Credit Reference Letter

We know the lender who requests your credit references may issue you with a list of the required information that needs to be in your references. But until then you don’t yet know what to expect in one. Here follows some of the basic types of information that could be expected in a credit reference.

  • The type of account you have with the reference issuer. It could also explain the nature of your relationship with the issuer (like with a personal character reference).
  • The length or age of the relationship.
  • The nature of your payment habits. A brief payment history or a statement confirming your payment behavior.
  • Account numbers and other information required to identify your credit history.
  • The average amount of credit you require from the issuer.
  • Your current outstanding balance at the issuer.

This is a basic set of criteria that you could expect in the average credit reference. Your lender may perhaps request additional information, but the ones listed above is what can generally be expected.

Sample Credit Reference Letters

The above-mentioned information helps you form an idea of the contents found in a credit reference. To help you see the final product, we’ve collected a few examples of credit references.

Example 1

(Applicant name) has been a customer since (date). In that time, they have made timely payments at the required amounts. Zero records of missed or late payments exist on the client’s record.

Example 2

(Applicant name) has been a client of ours since (date). They purchase supplies on a regular basis and always make timely payments. They have ordered to date a total of (amount applicable) in supplies from us and their account has never been suspended for any reason.

Example 3

(Applicant name) applied for a line of credit with us on (date). Their total approved line of credit is (applicable amount). They have a current outstanding balance of (applicable amount). They have paid all required amounts in a timely manner. They have never recorded any late or missing payments to date.

These examples are mere representations of how your references can state the required information. Make sure the language used conforms to a professional standard. Communication needs to be concise and without ambiguity. The success of your application depends on your references. So make sure it’s of high quality.

How to Improve Your Chances for a Positive Response

It doesn’t matter why you need a credit reference. You want the outcome to be successful. How can you ensure that? Here are a few things you can do to get a positive response. It could even help you get a car loan without a credit history.

Get the Required Information

The lender requires a specific set of information for a reason. Know the required criteria and make sure it is included in the contents of your credit references.

Supply it Within a Timely Fashion

No one likes to wait. Especially when there is money involved. Ask your lender by when they need your credit references and supply it within the expected timeframe.

Explain Any Discrepancies

A perfect credit report is a fortunate tool to own. But few people have that privilege. If you happen to have some issues on yours you could always use the credit references of your service providers to explain any issues with some context. A well-constructed explanation could help improve your chances of success.

Be Honest

This is not a time to be smart by bending the truth to save face. Be honest and transparent about your situation. Be open about your credit references to state the case as it is.

Read More


Credit references help you apply for credit. Lenders want to know the true state of your creditworthiness and credit references help to prove it.

You might have asked – “What is a credit reference?”, but now you know. Use the information supplied here to get your own credit references. You can also apply these tips to keep a good record that helps you improve your credit references for when you need it.

I agree to have my personal information transfered to MailChimp ( more information )
Join over 100,000 visitors who are receiving our newsletter and learn more about finance, immigration, and more!
We hate spam. Your email address will not be sold or shared with anyone else.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

Get the Checklist