What is a Credit Reference When Filling Out a Rental Application?

When you’re looking around for a home or apartment to rent, it’s quite a process. And when you do find a place, there’s some paperwork involved.

There are also several things you’ll need to have with you to prove that you are a good candidate for the rental. One of these things is a credit reference.

But what is a credit reference, and when might you need to have one? Read on to find out.

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What is a Credit Reference?

A credit reference is a document from a financial institution, past landlord, or someone who can vouch that you are responsible about your credit (hopefully). A credit reference allows a potential landlord to see whether or not you would be a reliable person to rent to based on credit history. 

So if you didn’t pay your past rent, your new potential landlord will know and may make the decision to not rent to you.

What Does a Credit Reference Mean on a Rental Application?

Basically, the person viewing the application wants to know that you have a history of good credit behavior. The landlord wants to be sure they can count on you to pay your rent and be a responsible person to rent to financially.

Before you begin applying, you may want to check your credit score if you have one. 

Types of Credit References

There are multiple ways to prove your credit is good. Check out the different types of credit references here. 

Credit Report

A credit report will show credit history and some additional information. It’s a good way for a landlord to see how well you’ve done with credit in the past, which can indicate how responsible you’ll be in the future. Personal information is also included.  

Asset Documentation

Show proof of what you own. Your bank statements are helpful for this, as they’ll show your income and how much money is currently in your bank account.

Checking and savings accounts are both assets. You may also document other things you own that are considered assets.

But you may not need to be this thorough, depending on the application and how comfortable you are adding this information.

Personal Character Reference

A personal character reference is written by someone you know, such as a friend, someone you work with, or anyone who will let the landlord know about your character. You want to ask someone who will give you a good reference letter, explaining why you are an ideal choice for a tenant.

The character reference usually explains that you are responsible and trustworthy, giving social proof to the landlord that they should consider you for the rental.

What is the Purpose of the Credit Reference?

There are a few reasons why your possible landlord will want a credit reference. First, taking on a rental tenant is a bit of a risk. They want to know that you are trustworthy and have good character. 

They are looking for people who will pay on time and won’t damage property. The reference also shows them how you’ve behaved in the past with money, giving them an idea of what you’ll do if they rent to you.

Last, it can keep those that do not have a good credit history or are bad tenants away from the application process. It helps the landlord to get through unlikely or potentially bad renters faster. 

Who Should I Ask for a Credit Reference on a Rental Application?

You don’t want to ask just anyone for a credit reference. You need to ask someone who you’ve worked with in a financial capacity at some point.

Here are a couple of good examples. 

Former Landlords

If you’ve rented in the past, ask a former landlord for a credit reference. It should be a landlord that you got along well with, and while living in their rental, you should have paid your bills on time. This will help them to write a positive reference that will help you with your next renting opportunity.

Credit Card Companies

Credit card companies can tell the possible landlord about your payment history and their financial relationship with you. This is a good way for the landlord to know if you are responsible with finances. 

Whom Should I List as My Credit Reference On My Rental Application if I Have No Credit?

Suppose you do not have any previous credit history. In that case, it’s a little more challenging to list a credit reference, but still possible.

You’ll need a reference who can prove you have responsible financial habits. 

This could be your bank, especially if you’ve had an account for several years. You can also consider a reference from a company you’ve paid bills to or made payments to in the past. Utility companies are a good option. 

What’s in a Credit Reference Letter?

A credit reference letter should be to the point and clear. The letter writer needs to explain how they know the applicant and how long they’ve worked with you financially. They should also explain the applicant’s payment history.

What if You Have No References for an Apartment Application?

First of all, you probably have some form of reference even if you think you don’t.

For example, if you don’t have any credit or loan history, you probably still have a bank that you use. You can show your income with statements.

You probably also make payments like a phone bill or utilities. And you likely have some friends who’d be willing to write a character reference.

So start with what you have. Gather financial documents that prove your income and show that you pay your bills on time.

Next, ask anyone that you can think of to be a credit reference, like a utility company or possibly a bank.

Then, ask a friend, co-worker, or someone you trust to write you a character reference. Try to get several of these; you never know if it will help.

If you have no credit references because you don’t have a credit card or any form of credit, you may be able to ask someone you know to be a co-signer. That way, you can still get the rental, and it gives you a chance to prove you can make payments.

But remember that you need to pay your rent in full every month. Otherwise, your co-signer becomes responsible. 

If you have some time before you need to rent a place, try to build up your credit history the best you can. Gather proof of on-time payments and save up as much money as possible.

If you don’t have any time, just do the best you can to show you are trustworthy and a good renter.

How Much Money to Save Before Renting an Apartment

When you first move in, your costs can be high upfront. Most apartment landlords will want you to pay both the first and last month of rent right away.

There’s also a fee for the rental application itself. In addition, be prepared to pay extra fees, like deposits, though they may not ask for both last month’s rent and a deposit. But there could be other costs, too.

You must ask about all fees in advance. It can add up quickly, and you may end up paying more than you thought.

You should always save up more than you think you need. Even if the payments are not made to your landlord, you will still have to pay for other things like moving costs.

So at the very least, save up at least three month’s worth of rent. That should cover first and last, plus any extra fees that come up. Of course, the more you can save, the better.

How to Save Up to Move Quickly

You may need to move quickly to a new place in some circumstances. If your lease will be up soon at your current apartment, you may need to save up some money quickly.

The first thing to do is get the right mindset. Understand that you may need to work harder than usual for a few months, but saving up the money will make it worth it.

After this, gain extra money from your current job if possible, saving everything you can. You may try to work extra hours, take on more responsibility, or work overtime. 

Next, start up a side hustle or get a temporary part-time job. Try to work as much as possible without interfering with your full-time day job. Use the money to save up for your move.

Related: Tips for Making Money Online as a Beginner

Last, know your amounts. Before you begin saving, know how much money you need.

Then divide that by weeks and months, so you know how many extra hours you need to work to save up the cash. Then get to work!

Having Good Credit References is Essential for a Rental Application

Having several good credit references can make your rental application stand out, showing that you are financially responsible. It’s essential to consider the future and gather good references continually. You never know when you might need one.

Remember to be prepared, have good credit references, and have all the necessary documents when filling out a rental application. Organization and hard work can help you get the apartment or home you’ve been dreaming of renting.

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Steffa Mantilla

Certified Financial Education Instructor

Steffa is a Certified Financial Education Instructor (CFEI) and the founder behind Money Tamer. Her 12-year background in operant conditioning and positive behavioral change training is used to help people find effective motivators to change their harmful money behaviors. Steffa explains the reasons “why” behind people’s financial behaviors and how to successfully change them. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. You can learn more about her here.

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