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Financial Terms and Glossary

Credit reference

Credit Reference

A credit reference is a statement or document provided by a bank, credit bureau, or lender that offers information about an individual’s or business’s credit history and creditworthiness. Credit references are used by lenders and financial institutions to evaluate an applicant’s ability to repay loans or lines of credit. A credit reference might include details such as payment history, outstanding debt, and any defaults.

Example

When applying for a mortgage, the bank may request a credit reference from a credit bureau to assess the applicant’s creditworthiness based on their credit history.

Key points

• A credit reference provides information on an individual’s or business’s credit history and creditworthiness.

• Used by lenders to assess an applicant’s ability to repay debt.

• Includes details like payment history, outstanding debt, and any defaults.

Quick Answers to Curious Questions

What is included in a credit reference?

A credit reference typically includes details like payment history, outstanding debt, credit limits, and any defaults or late payments.

Why do lenders require a credit reference?

Lenders use credit references to evaluate the risk of lending to an individual or business and to determine loan terms or interest rates.

Who provides credit references?

Credit references are provided by banks, credit bureaus, or other financial institutions that track credit history.

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