A credit reference is often required when a person is opening a new business and wishes to start a line of credit with a company for inventory or supplies, is looking to purchase a home or wants to borrow money from an individual or investing company. Credit references are best given by companies that have worked with the asking individual for longer than a year. Any company that offers installment payments can be asked for such a letter.
Begin the letter in proper business format with your letterhead or contact information at the top.
Address the letter directly to the individual or company who has requested the letter from your client, not directly to your client.
Include the dates of the loan, if any; late payments, if applicable within the last one or two years; the account number for the individual and the direct contact information of the person who prepared the letter.
State how long you have done business with your client, what type of business you are in together and what type of payments the client makes. For example, if you have provided insurance for your client, say something like: "We have provided Joe Smith with insurance for his vehicle for over three years. During that time, he was only 30 days late one time. When that incident occurred, Joe contacted us immediately and let us know what the situation was. He has been current on his account consistently for the last 18 months.
"Based on this experience, we believe that Mr. Smith is a good credit risk."
Put any negative information into context. Don't highlight something negative just because it occurred. For example, if you had an argument once with Joe Smith about his credit account, don't mention it in the letter.
Abstain from writing a credit reference if you do not believe the person to be a good credit risk or you feel uncomfortable for whatever reason giving a reference to this person.
Michelle Hogan is a writer and the author of 13 books including the 2005 bestselling memoir, "Without a Net: Middle Class and Homeless (With Kids) in America." Hogan studied English at American University and has been writing professionally since 1998. Her work has appeared in "The New York Times," "Redbook," "Family Circle" and many other publications.