A credit reference on a rental application is any information vouching for your creditworthiness as a tenant. You might turn to your credit card company, local bank, investment company, previous landlord, or a local business that gave you a payment plan.
Your bank statement may also be a potential credit reference if it shows you have assets, like current cash.
A rental application will provide information about your income, rental history, employment, and references. In addition, your landlord may ask you to submit an official credit reference letter confirming your reliability and responsibility as a tenant.
They prove to the landlord that you pay your bills on time and won't be at a financial risk.
Discover below types of credit references, how they work, what to include in a credit reference letter, and how to be successful with a rental application process using a credit reference.
Understanding a Credit Reference on Rental Applications
Adding a reference can be helpful, and maybe even necessary when filling out your rental application.
A credit reference can include a credit report or documentation from a previous lender or personal or professional acquaintance. Credit agencies' reports are sufficient, but individual letters of recommendation are sometimes required.
An entity that issues a credit reference letter has no obligations or associations with the rent. They can only attest to your timely and consistent payment history.
The landlord will then contact your credit references with a tenant screening checklist to get an overview of your credit history and detect any delinquencies, such as collections accounts or late payments.
With such information, the landlord will have a better idea whether they need to charge you a large deposit, request several months' advance rent, or refuse to rent.
The landlord may ask for a credit reference letter if they feel it’s necessary or if they just want to be extra careful.
Types of Credit References
Each landlord defines "credit reference" differently. But, your credit score and credit report from Equifax, Experian, or TransUnion are the most common.
Some other credit references you can use include:
- Asset Documentation
- Financial Documentation
- Character References
Each of these types of references work differently, to understand them better we detail them below.
Asset Documentation
A substantial asset portfolio shows you manage your money and will be a responsible tenant. You must ask the financial institution to supply the information to your prospective landlord.
Many landlords view asset documentation as a credible and highly effective credit reference.
Asset documentation as a credit reference may include:
- Savings accounts
- Retirement funds
- Stocks and bonds
Financial Documentation
In contrast to asset documentation, this type of documentation emphasizes the business entity's assets rather than an individual's assets.
You could, for example, provide documentation to show a business's access to capital if you subsidize it.
As a business owner or investor applying for rental application services, you can request that other investors submit statements showing the amount of capital available to the company.
Character References
A character reference is a statement provided by a reliable source, such as a past landlord, a previous employer, or a utility company you had an account with. The reference entity should detail the individual or entity's experiences with you. It can provide insight into your character and how responsible you are with your responsibilities.
Character references do not provide detailed information about your past financial obligations, but they can show whether you have successfully fulfilled your responsibilities, including rent and debt payments.
Get a Character Reference Letter
How Do Credit References Work on Rental Applications
Landlords use several tools to perform a tenant screening on applicants and find the most qualified tenants.
Referrals should come from businesses that can provide positive details about the financial relationship you have maintained with them.
You may include any of the following as referrals:
- A bank with which you have a credit card
- A company where you pay your bills regularly
- Previous landlords in your credit references.
If you have a cosigner, they may also need to supply credit references when you apply for an apartment.
Any negative information about your credit history could cause your application to be rejected. If your previous landlord refuses to provide a reference, some property management companies may automatically deny your application.
Landlords must ensure they're not breaking the Fair Housing Act laws when screening tenants.
The landlord cannot discriminate against a tenant based on race, color, national origin, religion, sex, family status, or disability.
What to Include in a Credit Reference Letter for Rental Applications
If you're asking someone to write a credit reference for you, you can let them draft a letter you will then customize with relevant information. Be sure the letter includes:
- Your name and contact
- Your phone numbers and email address
- The legal name and contacts of the entity referring you
- Date and duration of the business' existence
- The loan agreement and repayment history
- The billing address
- A statement stating that the information provided is accurate and true
- Permission to contact references to verify the accuracy of the information provided
Sending a sample recommendation letter to whoever is writing the credit reference may make it easier. If you're responding to a request for credit references by providing a list of contacts, be sure to collect all the above information.
How to Succeed With Your Credit Reference Letter
A well-written credit reference letter can increase or decrease your chances of success with a landlord. Here are a few tips to help you succeed with a credit reference letter.
- Gather all relevant information: have everything you need to know at hand for the letter
- Promptly provide information: Show that you are prompt and quick to make a very good impression
- Clarify any mishaps in your response: Clarify anything that may affect your creditworthiness, e.g., losing your job or illness
- Be transparent: List your past evictions to ensure the information comes from you instead of an ex-landlord
How Long Does it Take to Process a Rental Application?
Property management companies with large staff can review applications within 24 to 72 hours, and with a cosigner, it might take longer — a week because there are more background check, and credit reports to pull.
Landlords with large complexes or many rental units may have websites that simplify the process, while smaller owners may still require paper applications. Either way, attach the rental application fees and complete the rental application thoroughly.
Get a Rental Application Form Now
Helpful Resources:
Table of Contents:
- Understanding a Credit Reference on Rental Applications
- Types of Credit References
- How Do Credit References Work on Rental Applications
- What to Include in a Credit Reference Letter for Rental Applications
- How to Succeed With Your Credit Reference Letter
- How Long Does it Take to Process a Rental Application?
Table of Contents:
- Understanding a Credit Reference on Rental Applications
- Types of Credit References
- How Do Credit References Work on Rental Applications
- What to Include in a Credit Reference Letter for Rental Applications
- How to Succeed With Your Credit Reference Letter
- How Long Does it Take to Process a Rental Application?
A credit reference on a rental application is any information vouching for your creditworthiness as a tenant. You might turn to your credit card company, local bank, investment company, previous landlord, or a local business that gave you a payment plan.
Your bank statement may also be a potential credit reference if it shows you have assets, like current cash.
A rental application will provide information about your income, rental history, employment, and references. In addition, your landlord may ask you to submit an official credit reference letter confirming your reliability and responsibility as a tenant.
They prove to the landlord that you pay your bills on time and won't be at a financial risk.
Discover below types of credit references, how they work, what to include in a credit reference letter, and how to be successful with a rental application process using a credit reference.
Understanding a Credit Reference on Rental Applications
Adding a reference can be helpful, and maybe even necessary when filling out your rental application.
A credit reference can include a credit report or documentation from a previous lender or personal or professional acquaintance. Credit agencies' reports are sufficient, but individual letters of recommendation are sometimes required.
An entity that issues a credit reference letter has no obligations or associations with the rent. They can only attest to your timely and consistent payment history.
The landlord will then contact your credit references with a tenant screening checklist to get an overview of your credit history and detect any delinquencies, such as collections accounts or late payments.
With such information, the landlord will have a better idea whether they need to charge you a large deposit, request several months' advance rent, or refuse to rent.
The landlord may ask for a credit reference letter if they feel it’s necessary or if they just want to be extra careful.
Types of Credit References
Each landlord defines "credit reference" differently. But, your credit score and credit report from Equifax, Experian, or TransUnion are the most common.
Some other credit references you can use include:
- Asset Documentation
- Financial Documentation
- Character References
Each of these types of references work differently, to understand them better we detail them below.
Asset Documentation
A substantial asset portfolio shows you manage your money and will be a responsible tenant. You must ask the financial institution to supply the information to your prospective landlord.
Many landlords view asset documentation as a credible and highly effective credit reference.
Asset documentation as a credit reference may include:
- Savings accounts
- Retirement funds
- Stocks and bonds
Financial Documentation
In contrast to asset documentation, this type of documentation emphasizes the business entity's assets rather than an individual's assets.
You could, for example, provide documentation to show a business's access to capital if you subsidize it.
As a business owner or investor applying for rental application services, you can request that other investors submit statements showing the amount of capital available to the company.
Character References
A character reference is a statement provided by a reliable source, such as a past landlord, a previous employer, or a utility company you had an account with. The reference entity should detail the individual or entity's experiences with you. It can provide insight into your character and how responsible you are with your responsibilities.
Character references do not provide detailed information about your past financial obligations, but they can show whether you have successfully fulfilled your responsibilities, including rent and debt payments.
Get a Character Reference Letter
How Do Credit References Work on Rental Applications
Landlords use several tools to perform a tenant screening on applicants and find the most qualified tenants.
Referrals should come from businesses that can provide positive details about the financial relationship you have maintained with them.
You may include any of the following as referrals:
- A bank with which you have a credit card
- A company where you pay your bills regularly
- Previous landlords in your credit references.
If you have a cosigner, they may also need to supply credit references when you apply for an apartment.
Any negative information about your credit history could cause your application to be rejected. If your previous landlord refuses to provide a reference, some property management companies may automatically deny your application.
Landlords must ensure they're not breaking the Fair Housing Act laws when screening tenants.
The landlord cannot discriminate against a tenant based on race, color, national origin, religion, sex, family status, or disability.
What to Include in a Credit Reference Letter for Rental Applications
If you're asking someone to write a credit reference for you, you can let them draft a letter you will then customize with relevant information. Be sure the letter includes:
- Your name and contact
- Your phone numbers and email address
- The legal name and contacts of the entity referring you
- Date and duration of the business' existence
- The loan agreement and repayment history
- The billing address
- A statement stating that the information provided is accurate and true
- Permission to contact references to verify the accuracy of the information provided
Sending a sample recommendation letter to whoever is writing the credit reference may make it easier. If you're responding to a request for credit references by providing a list of contacts, be sure to collect all the above information.
How to Succeed With Your Credit Reference Letter
A well-written credit reference letter can increase or decrease your chances of success with a landlord. Here are a few tips to help you succeed with a credit reference letter.
- Gather all relevant information: have everything you need to know at hand for the letter
- Promptly provide information: Show that you are prompt and quick to make a very good impression
- Clarify any mishaps in your response: Clarify anything that may affect your creditworthiness, e.g., losing your job or illness
- Be transparent: List your past evictions to ensure the information comes from you instead of an ex-landlord
How Long Does it Take to Process a Rental Application?
Property management companies with large staff can review applications within 24 to 72 hours, and with a cosigner, it might take longer — a week because there are more background check, and credit reports to pull.
Landlords with large complexes or many rental units may have websites that simplify the process, while smaller owners may still require paper applications. Either way, attach the rental application fees and complete the rental application thoroughly.
Get a Rental Application Form Now
Helpful Resources:
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