Credit is granted when an organization or an individual makes money enough to give its customers some of it to borrow. There are mainly two kinds of credit-

a) Home loans, or mortgages, and personal or shop loans are linked to a specific item or items and
b) Revolving credit on payment cards can give an individual access to a fixed amount of money that he or she can spend as he or she wishes, in a wide range of retailers and other outlets.

Credit reference can also be referred to as credit history. It is handy information, which holds the creditor’s personal information, be it of a person or an institution or an organization.

It provides dealers an account of credit applicants’ past credential dealings in order to make a more accurate decision.

Credit rating agencies essentially play this role in while working with consumer credit. Potential lenders, that is individuals or organizations or institutions that are interested in investing their money, consult with established credit rating about appropriate applicants.

These initial talks are necessary for it decides whether the said person, organization or institution is reliable enough to be granted credits.

Credit references help to assess whether if an applicant’s credit history indicates proper, timely payments on all outstanding obligations.

A lender would be able to judge all by himself whether that the applicant will make timely payments on the requested loan or not.

Credit references also indicate the applicants’ bank account, what type of account it is, mentioning at the same time about overdrafts.