A credit reference is a person or a company that has a financial connection to another person or company. This connection implies that the credit reference has accurate knowledge regarding the financial state or habit of the other party at some point in time. One can often find credit references in credit reports, which are reviewed when a person applies for a loan, a credit card, and so on.
Credit references are automatically added onto a person’s credit history each time an individual carries out a financial transaction. For example, if you apply for a new credit card and you get approved, the credit card company becomes one of your credit references. If you get a car loan from a bank, the bank also becomes a credit reference.
What is the importance of a credit reference? In today’s credit-driven society, having a good credit history and credit score is of paramount importance. Since your credit references are tied in directly with your credit history, your financial transactions with them carry a lot of weight. You ought to consider the companies that you deal with - make sure that they are reputable. More so, you ought to fulfill your financial obligations: pay your bills on time, make your loan payments regularly, and so on. At the end of the day, these records may very well determine your future financial transactions.
It is also important that you know who your credit references are. More than that, you need to ensure that the records kept are accurate. That is why you should make it a habit to check your own credit report so that you can countercheck the information contained in it.