Breaking Down Credit Reference Form:
Summary: A report issued by a credit reference agency both for individuals and businesses constitutes credit reference form.
A credit reference is nothing, but a report from a credit rating agency, issued to state about the credit worthiness of an organization or an individual. Generally, a credit reference form is filled by a financial or banking agency acknowledging the creditworthiness of their client to a third party. In other terms, banks and financial institutions issue this statement stating that the particular organization or individual is good to do business with as there are no credit issues.
Who issue this document other than banks?
Not just banks and financial institutions, in some countries, credit bureaus provide credit reference to individuals, while Credit Rating Agencies do this for businesses.
When the credit reference form is filled up by banks, there will be details like longevity of account holding by the individual or organization, type of account held, details about late payments if any and also details about any overdrafts by the account holder.
Usage of credit references:
Generally, lenders will quantify the risk of lending to a specific applicant with the help of a credit reference document. For instance, if the credit history of an applicant showcases appropriate and timely payments on all obligations that are outstanding, the lender can somewhat come to a conclusion that the applicant will not deceive. They will also come to a judgement that the individual or organization will make payments on timely manner and so it is safe to lend a specific sum of money.
