A credit reference is information, the name of an individual, or the name of an organization that can provide details about an individual's past track record with credit. Credit rating agencies provide credit references for companies while credit bureaus provide credit references for individuals.
Other letters of credit reference might be written by banks which would provide basic information about how long the applicant has held an account, what type of account it was, and whether or not there were any overdrafts or late payments noted.
How credit references are used
Credit references are used to help lenders quantify the risk of lending to a given applicant, or to determine overall creditworthiness. For example, if an applicant's credit history indicates proper, timely payments on all outstanding obligations, a lender may judge it more likely that the applicant will make timely payments on the requested loan.
