What Is a Credit Reference on a Rental Application?

When filling out a rental application, tenants are required to include their contact information, social security number, rental history, employment information, and a credit reference for the landlord to review. Credit references are often included in the screening process, but you may be wondering what exactly they are and how they impact a tenant’s chances of getting approved.

We’ve explained what a credit reference is, the different forms of credit references tenants can share, and how they can impact a person’s chances of getting approved for an apartment.

What Are Credit References on a Rental Application?

Credit references on a rental application consist of a person or business that has had a financial relationship with an applicant that can speak on their trustworthiness and ability to make on-time payments. The most common type of credit references used by landlords is a credit report to better understand a tenant’s financial history.

Almost all credit references will provide information on the duration of the financial relationship, the applicant’s payment history, the total amount they owed, and if any debt was accrued.

The Different Forms of Credit References

Credit references come in various forms, each having varying levels of effectiveness. Here are five credit reference forms an applicant can provide a landlord during the rental application process:

1. A credit report:A credit report includes a comprehensive overview of an applicant’s credit history, payment history, and current debt. This is the most effective form of a credit reference that can help increase the applicant’s chances of getting approved for the apartment. Landlords can receive an applicant’s credit report by requesting it through a rental application or a renter profile if a tenant has previously created one.
2. Asset documentation: If an applicant has a substantial amount of assets, then they can request asset documentation from the financial institution they work with. This can be for a savings account, retirement funds, stocks, or bonds.
3. Financier support: Similar to asset documentation, this credit reference shows the amount of capital available to a business and is often an ideal option for business owners.
4. Character reference: Although a character reference is the least effective form of credit reference, this can be a great option for tenants with little to no credit or those renting their first apartment. A character reference can be issued by a previous landlord or employer to shed light on an applicant’s character or previous payment history.
5. Buy now, pay later merchant statement: With the emergence of platforms like Afterpay and Klarna, which allow shoppers to finance their purchases through four interest-free payments, users can now export merchant orders to show the total amount owed, payment history, and account information. While not all landlords may accept this, it may be worth including as a credit reference for those that cannot provide a credit report, asset documentation, or financier support.

How Do Credit References Impact Rental Applications?

If the applicant has a credit score under 629, no established credit, or is renting their first apartment, then a credit reference can help landlords better understand an applicant’s financial history. Not only can it increase the chances of a tenant’s application being approved, but credit references can provide landlords the information they need to determine if the tenant is a good fit for the property.

If a tenant is unable to provide a credit reference in a timely manner, this can make it harder to get approved for an apartment, especially if they’re unable to get a co-signer or have a previous history of missing payments. To avoid that from happening, tenants can create a renter profile to have a credit report on hand or request a character reference from a previous landlord before searching for their next apartment.

Request Credit References Through Avail

Whether a credit report or another form of credit reference is requested, Avail can help landlords craft personalized rental applications to ensure they get the information they need to find their next tenant.

With Avail, landlords can create rental applications to include custom questions and request a rental background check. If a tenant has no credit or is unable to provide a credit report, landlords have the option to add a custom question allowing tenants to provide a different form of a credit reference.

Create an account to craft an online rental application and begin screening tenants for your rental property.