If you are a service provider and your customers ask to sell something on credit, you might be afraid to do it because you don’t know the customer well. We cannot lend money to those with who we don’t have any interaction and we are not sure if they will pay us back or not. It is not safe to lend money to such people. However, if you get a credit reference letter, you can trust the person asking for the loan.
What is a credit reference letter?
If you have been asked to provide the credit reference letter, you will be required to consult someone who knows your credit history. The person who will write this kind of reference letter will collect information about your credit history and then decide if he should write a reference letter or not.
If you have been asked to write a reference letter for someone, you will also have to describe the payment history of that person. The person you write this letter for should be someone you have worked it. You would never like to write for someone you don’t know much. Whenever you write a reference letter, you should try to be truthful. If the person you are referring to pays money late, you must include this fact in the letter.
What are the uses of the credit reference letter?
There are different services a person can get if he is able to provide a reference letter of this type. When you write a reference letter, you vouch on behalf of someone that helps that person to get the extension in the credit. Here is a list of purposes for which you can get a credit reference letter written:
- For getting business loans:
If you want to start a new business and you need a business loan, you will have to provide a reference to the creditor. You need to boost your credit score to get the loan. The letter of reference can help you in this regard. If you can get a letter favorably written, getting a loan is not difficult.
- When your credit score is low:
At times, a person’s credit score is low because of not taking many loans or for any other reason. In such a situation, that person cannot apply for a loan based on his credit score. The only way he can loan is by getting a credit reference letter.
How to get the credit reference letter?
- Know the requirements:
Before you request someone to provide you with this letter, you should the requirements. If you can meet those requirements, you must request the letter.
- Request for the letter:
Once you have found the person who can write you the reference, formally request him to do this favour.
- Provide your details:
No person can access your information or reveal your information to anyone without your permission. So, you should authorize him to write the letter with your account number details and much more. The person writing this letter will communicate directly with the creditor. Therefore, tell him beforehand that what he should include in the letter and what he should not.
Below is a sample letter in which a person is writing a reference letter for someone who needs it.
Sample Credit Reference Letter
Name of the recipient:
Contact details of the recipient
Respected (mention the name of recipient),
I am writing this letter in response to the inquiry letter received from you about Mr. ABC. I can vouch that he is an honest individual who has a very good financial record. He is the best candidate whose loan application can be approved. Mr. ABC has a good character and he always pays back the loan.
I am enclosing the financial documents that can prove the financial arrangement of Mr. ABC with us. Through these documents, you can see that he was able to fulfill his commitment with us regarding paying off the loan. His behavior was satisfactory with us and we faced no delay from his side.
Name of the sender
Signatures of the sender
File: Word (.docx) 2007+ and iPad
Size 17 Kb