Get used to hearing those two words, because you’ll hear them plenty. When renting a place to live, borrowing money, getting a car, and more. Credit references show you’re capable of making payments on anything you buy. Credit card references aside, these documents will show you’re worthy of a loan.

Types of Credit References

Some are more effective than others. But you should know them all.

Credit Report

This is often the heart of what shows you’re worthy of getting a loan. Employers, lenders and landlords-they all look to this to get a sense of your financial responsibility. Sure, there are many variables-your account’s age, credit inquiries, current debt level, etc. All of this factors into your chances.

You should be transparent and provide context around any details where your credit may have suffered. And if it was a mistake, write a letter explaining the situation or ask for reconsideration.

But above all your credit reports tell your fiscal tale. So, get a free copy of your credit report each year from the three major credit reporting bureaus by visiting AnnualCreditReport.com.

Asset Documentation

Assets such as savings accounts, stocks, bonds, or retirement funds can show you can pay your debts. This is why these documents can also be helpful in showing your creditworthiness.

Character Reference

These references can be helpful if you’re new to the U.S. or are new to having credit. It’s a document where past employers, lenders and landlords essentially stand up for your character, integrity and ability to pay off future debts. Thus, even with no credit, you can be looked favorably upon. Which may help you get that apartment.

Who Needs a Credit Reference?

You might need credit references in the following situations:

Loan applications

When applying for a personal loan, providing a credit reference to the lender helps them evaluate your financial standing and your ability to repay future loans. 1st Source Bank has some excellent loan options for you to consider and we would love to help you find one that fits your needs.

Rental applications

When applying to rent places to live, landlords may ask you for a credit reference. Bad credit scores may increase security deposits, or you may need a co-signor to get the apartment.

Utility services

Providers for things like electricity, water, phone, and gas may check credit references before activating service.

Bottom Line

Good credit references don’t just help you get loans. They can get you better rates and terms based on your credit score, and they can also help you get your utilities without an increased security deposit. In fact, good credit references can also get you insurance at lower rates since most states allow insurance companies to use credit scores to determine their rates. It’s important to maintain good credit and good credit references.

© Fintactix, LLC 2022