What is a credit grantor on a rental application?

What Is A Credit Grantor On A Rental Application?

What is a credit grantor? Let’s begin with the most generic definition of a credit grantor. A Credit Grantor is someone that grants you credit. So, what is credit then? You use credit to pay for some product or service that you can’t pay for immediately. Credit is the ability to borrow money from someone with the promise that you’ll repay them in the future. Mostly, you repay them with interest. A credit grantor can be a person or an institution.

Rental applications may require a credit reference. Credit reference on a rental application lets your prospective landlord know about your payment habits. A credit grantor on a rental application is a person or institution with whom you’ve had a financial relationship in the past. A credit grantor can be a Bank, credit card company, financial institution, company, or a person.

In this article, we are going to provide a detailed answer to the question, “What is a credit grantor on a rental application?”

Credit Grantor Meaning:

What Is Credit Grantor? A person or company that grants you some form of credit is called a Credit Grantor. It is a term mostly used for your credit card issuer or a company that lends you money. So, we can say that a credit grantor is not a particular person.

Who is The Credit Grantor?

A credit grantor can be:

  • A person
  • An Institution

In most cases, a credit grantor is an institution. Financial institutions are professional lenders. You may take a personal loan from a person who is not a professional lender. That specific person will be your credit grantor.

Credit Grantor Example:

Now that you’ve learned the credit grantor definition. Let’s see the credit grantor example to better understand the credit grantor meaning.

  • You get a credit card from a financial institution. Let’s say its name is “ABC Bank”. As this “ABC Bank” is your credit card issuer, it is also your credit grantor.
  • You get electricity from a power company. Let’s say its name is “XYZ Power”. The power company provides you with electricity for the current month. And you pay the bill in the next month. In this case, the power company “XYZ Power” has provided you with service in advance. This is called service credit. And “XYZ Power” will be considered your credit grantor.

So, we can simply say that a credit grantor is someone who grants you credit. Now, you might be wondering, “But what is a credit grantor on a rental application?” Let’s find out.

What Is A Credit Grantor On A Rental Application?

The credit grantor on a rental application is someone with whom you’ve had a financial relationship in the past. A creditor grantor can be any one of the following:

  • Person
  • Financial Institution
  • Business
  • Organization
  • Utility Company
  • Bank
  • Previous Landlords

You have to fill out a rental application for renting a place. This application contains a section named Credit Reference.

The purposes of this section include:

  • It provides information about tenants’ payment habits.
  • Landlord gets to know about the past financial relationships of a tenant with credit grantors.
  • This section also provides insights into the trustworthiness of a tenant.
  • It provides a better understanding of a tenant’s financial history.
  • The information in this section helps landlords decide whether to extend a lease or not.

This section includes the following elements:

  • Name of the person or institute
  • Duration of the financial relationship
  • Payment history
  • Total amount owed
  • Accrued debt (if any)

If a landlord needs more information about a tenant’s payment behavior, he can contact the credit grantor. If he gets positive reviews, the rental application will be likely to be approved.

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What Is A Credit Reference On A Rental Application?

Well, credit references on a rental application are the details of credit grantors. The people or businesses with whom you’ve had a financial relationship in the past. They can provide information about your ability to manage and pay back debt. They can also provide information on your past and current payment behaviors. Landlords may contact them during your credit check for the screening process. 

By credit grantor definition, a credit grantor is a person or business that grants you credit. And a credit reference is a reference to that person or business. Credit Grantor and Credit Reference are used interchangeably. 

Types of Credit References:

There are a few types of credit references. Some of them are given below:

Credit report: 

A credit report is a detailed overview of an applicant’s credit history. It also includes the applicant’s payment history and current debts. A credit report is the most effective way of getting your application approved.

Asset documentation: 

It is a list of an applicant’s assets. The assets may include:

  • Saving Accounts
  • Retirement Funds
  • Investments
  • Stocks 
  • Bonds

Character reference: 

It is the least effective way to get your rental application approved. But it is best for those renting for the first time. And also for those with little or no credit history. Your employer, lender, or previous landlord can issue a character certificate. It describes your financial habits.

Friend or Acquaintance:

You’ve borrowed money from a friend. This loan will not show up on your credit report. You try to use that person as your credit grantor. Your landlord may not accept it. But if you have a limited or zero credit history, you can consider this option. It is better than having no credit reference at all.

How Does a Credit Grantor on a Rental Application Work?

  • Landlords use numerous ways to screen the most qualified tenant. Credit Grantor on a rental application is one of them.
  • You may be asked to provide more than one credit reference. You also have to authorize your landlord to contact your credit grantors about your rental application.
  • Credit grantors must provide positive reviews about the financial relationship you had with them. 
  • If there are two or more applicants, all have to provide their credit references.
  • You are required to provide the name, address, and phone number of your credit grantor. 
  • The landlord may contact the credit grantor you provided. Landlord can ask them for information about your payment behavior.
  • If there are any negative reviews, the landlord can reject your application.
  • Some landlords can also reject your application if there is no credit reference.

Why Do I Need a Credit Grantor for My Rental Application?

The requirement for credit grantors varies among rental companies. You may or may not be required to provide a credit reference. Sometimes, you are also required to provide a landlord reference too. Some rental applications don’t require a credit grantor. But the landlord may ask for it afterward.

You need a credit reference when you need to show your creditworthiness for:

  • Rental applications
  • Credit card applications
  • Loan applications
  • Some utility companies require credit references 

Credit Reference Example:

Let’s say you are looking for an apartment to rent. You fill out a rental application. The rental company wants to run a credit check on you. You provide them with your credit report. You also ask your previous landlord to vouch for you. Your previous landlord sends a letter to your rental company. If you get positive reviews, your application is likely to be approved.

In this example, you provided two types of credit references. A credit report and a character reference.

Impact of a Credit Reference on a Rental Application:

  • If you have great credit references, your landlord will be comfortable accepting you as a tenant. Having a solid credit history can get your rental application approved.
  • If you have a bad or zero credit history, the landlord might not feel comfortable renting to you. And your rental application will be rejected.

How to Maintain a Responsible Credit History?

To maintain a responsible credit score, 

  • Make sure you pay your bills on time. 
  • Don’t overuse your credit cards. 
  • Maintain a clean payment history.
  • Check your credit report for any errors.

So, when a credit reference is requested, you’ll be in a good position to get your rental application approved. 

Final Words:

When you fill out a rental application, you are required to provide some details for your landlord to review. Including your contact info, SSN (Social Security Number), rental history, employment info, and credit reference.

A credit reference is the determining factor for getting approved in the screening process. You need to have a responsible credit history if you want to get your rental application approved. Landlords don’t feel comfortable renting the property to a person with bad credit history.

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