When making a rental application, you want to reflect your value as a tenant as completely as possible. Selling yourself will only get you far in the eyes of potential landlords, but other people’s words often carry more weight.
Therefore, you may need materials to enhance tenant screening. Don’t just rely on your credit report, documents from your financial institution or even pay stubs, but provide some references.
Different details from different types of references can provide information that makes your rental application stand out to potential landlords. They can increase your odds of being approved for the rental property you want.
What is a credit reference?
Credit references are documents that prove an applicant’s creditworthiness. These letters can come from a variety of sources, but their goal is the same—to provide details that prove you paid your bills on time when they were due.
The landlord or property management company may already have a reference requirement when applying to rent, but even if not, it’s okay to provide these supplementary information. Just be sure to choose a credit reference who speaks positively about your credit history.
If you don’t have a good credit history or have outstanding debt, a reference of credit can double as a verification of character or employment. Both can help show that you are a responsible tenant.
When is a credit reference required?
Since credit references can expand your payment history and prove your likelihood of paying on time, you may want to have them in a variety of situations. Any time you want to borrow money or apply for a credit card is a good time to consider it. Of course, they can also be a key part of the rental application process.
Not only do these references provide insight into the applicant’s credit history, they also help the landlord understand your creditworthiness and whether you are likely to pay your rent on time.
Can they replace credit reports?
While a credit score is the neatest way for landlords to understand your payment history and whether you missed payments on previous leases, etc., there are no details here, just the facts.
Credit reports come from the three major credit bureaus: TransUnion, Equifax, and Experian. There is no character reference attached to your credit score, and credit reports often miss any extenuating circumstances that caused you to be late with your payments.
Credit references fill in the gaps. They provide content that helps landlords understand what’s going on. For example, if you have a penalty on your credit report for not paying one month’s rent on time, but your check gets lost in the mail, a letter from your previous landlord can clear up any issues.
Most landlords will still want to see credit reports, so think of your credit references as a supplement rather than a replacement.
How to choose credit references
When choosing a credit reference, it’s important to ask people who will speak positively about your credit history. Good options may include:
- previous landlord
- utility company
- employer
- Financial institution or any previous lender
Bad credit history may include:
- family or friends
- a collection agency
- ex-spouse
If you had any type of issues with your previous landlord, they may also be a sign of bad credit. This includes payment issues, but also general getting along issues.
Sure, friends and family will say good things about you, but aren’t always considered reliable options because of their personal connection to you. While friends and family are happy to ask, they won’t carry as much weight as an employer, co-worker or former landlord.
Character reference
If you have no credit history and need someone to provide a character recommendation, you may instinctively go to your friends and family. If possible, reach out to coworkers, neighbors, or even people you volunteer with. They will provide a more unbiased view of your personality from a landlord’s perspective.
What does a credit reference letter include?
When asking people to write credit references for you, have them prepare a letter and you will add the relevant information. Make sure any letters of recommendation include:
- your name
- current address
- and email and phone number
Make sure the letter is addressed to your future landlord, so ask for the letter writer and provide your landlord’s name, address and email. You may even want to send them a sample letter to make it easier for you to write.
If you are simply responding to a credit reference request by providing the landlord with a list of contacts, make sure each entry has:
- Name
- Contact information
- relationship with you
For example, if you were listing your current landlord, the entry would look like this:
Mr. Joe Landlord, joeland@landlord.com, current landlord
Other forms of credit references
There are several different types of credit references that can support credit reports and your actual credit score. They don’t have to be notes written by a specific person. Supporting documentation can also enhance the story of your credit report and add depth to your personal financial situation.
Other supporting documentation includes:
- Checking or savings account history
- public record
- pension statement
- Pay stub and/or W-2 form
Each of these different forms and documents can increase the positive impact of your application on potential landlords. They add more detail to your credit history than just a single number. They work together to help build your credibility.
Financier Support Documents
Credit references may also come in the form of financial supporting documents. This type usually comes from a family member or friend who agrees to co-sign your rental agreement or act as a guarantor for your rental payments.
This type of reference is especially helpful if you don’t have a strong credit profile and are trying to eliminate negative items on your credit history.
Employment Reference
Proof of employment is another form of credit used to show that you are a responsible tenant. Current or previous employers can provide employment references, but include your title, dates of employment, and salary in their references.
asset file
An equity document is a credit reference that shows your financial stability, which can translate into your ability to pay rent. It includes bank statements, investment account statements, and retirement account statements.
rental history
Your rental history is another credit reference that landlords may check. Your rental record includes information about your previous rentals, such as whether you paid on time, how long you stayed at each rental, and whether any damage was left behind.
Utility Services Reference
Utility references help demonstrate your ability to pay any type of bill on time. This includes information about your electric, gas, water and garbage bills. When you get down to it, rent is just another bill, so how you pay these smaller bills can help impact your creditworthiness for the larger bills.
If in doubt, please include a credit reference
Credit references add depth to a potentially deceptive credit score. Even if your landlord doesn’t ask for credit references, consider adding some from a trusted source to really show who you are as a tenant. Make sure they describe how responsible you are and how likely you are to pay your rent on time.
Credit references from the right sources will only help improve your consideration for your next place of residence.
