Do You Need A Personal Reference For A Loan?

Lisa
Author:
Lisa
Lisa Rennie
Senior Contributor at Loans Canada
Lisa has worked as a personal finance writer for over a decade, creating unique content to help educate Canadian consumers. Expertise:
  • Personal finance
  • Real estate
  • Mortgage financing
  • Investing
Priyanka
Reviewed By:
Priyanka
Priyanka Correia, BComm
Senior Editor at Loans Canada
As a senior member of the Loans Canada team, Priyanka Correia is committed to empowering Canadians with the knowledge they need to make smart financial choices.
Expertise:
  • Personal finance
  • Consumer borrowing
  • Consumer banking
  • Debt management
📅
Updated On: September 11, 2025
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Wondering why your lender wants a personal reference as part of your loan application? It’s not just about your credit score; it’s about giving lenders extra assurance and helping confirm your reliability and stability as a borrower. This extra step can be just what’s needed for you to get your loan application approved.


Key Points

  • A personal reference is someone who can vouch for your character, reliability, and identity to help lenders assess your trustworthiness.
  • Personal references may include employers, work colleagues, mentors, coaches, and teachers.
  • When using a personal reference, be sure to include their full name and contact information, and confirm with them that they’re comfortable being named as a reference.

Do You Need A Personal Reference When Applying For A Loan?

Although banks don’t always ask for a personal reference, private lenders sometimes may ask for one to support your application for a loan. Typically, personal references are requested by banks or other financial institutions during the mortgage application process.

Private lenders may also request a personal reference, especially if you’re applying with bad credit. These lenders may use a personal reference to help verify your character and reliability to ensure you pay back the loan. 

Learn more: Personal Loan Requirements: How To Qualify For A Personal Loan


What Is A Personal Reference?

A personal reference offers insight into your character. Also known as a character reference, a personal reference is requested to verify that the information you have presented is correct. 

While you may appear to be a responsible person who would pay back a loan as per your loan contract, surface-level assumptions aren’t always enough to build trust. This is why personal references are often so important for certain financial transactions. 

What’s The Difference Between A Personal Reference And A Credit Reference?
A credit reference provides information about your financial history. It usually comes in the form of a credit report, credit score, or a letter from a previous lender that details your past borrowing and repayment behaviour. 
A personal reference, on the other hand, is someone who can vouch for your character, reliability, and trustworthiness. This type of reference helps lenders assess your personal qualities and overall dependability.
Essentially, while a personal reference speaks to your character, a credit reference focuses on your financial responsibility.

Who Can Be A Personal Reference? 

There’s usually a wide array of options you can choose from when deciding who to use as your personal reference. Here are a few suggestions:

  • Co-workers or employers: Workplace references are great choices because they can verify your career, income, and dependability as an employee.
  • Professors or academic advisors: These individuals are ideal for students or recent grads, as they can highlight your dedication and ability to meet commitments.
  • Community leaders: Religious leaders, volunteer coordinators, or coaches can provide insight into your character, values, and consistency.
  • Former landlords: If you’ve rented in the past, your previous landlords can describe your rent payment history.

What Information Do You Need To Provide For A Personal Reference?

When providing a personal reference, it’s important for you to provide accurate, up-to-date, and detailed information. Remember to include the following:

  • Full names
  • Contact Information
  • Relationship (who is this person to you? Ex. teacher, employer, friend, etc)
Tip: It’s a good idea to ask your references if they’re comfortable being a personal reference for you before providing their information to a lender. This way, they are prepared for the phone call and can confidently verify the information you’ve provided the lender with.

Why Do Lenders Ask For A Personal Reference? 

Lenders need to verify that the information and image you are presenting to them is accurate. Here are a few reasons why lenders ask for personal references: 

  • Prove Identity/Security: An identification card is often sufficient to prove one’s identity. But, personal references can assure a lender that you are who you say you are, and that they won’t be chasing a ghost if you don’t pay back a loan.
  • Information Verification: Lenders will use personal references to verify the information you’ve provided in your loan application. For example, the reference can assure a lender that you are working and living where you indicated on your application.
  • Contact Details: Finally, personal references can assure a lender that the contact details you provided are accurate. If they’re not, lenders may use your personal reference to get in touch with you if need be.

Other Times, A Personal Reference May Be Required

Personal references are required in many scenarios, including the following:

When Applying For A Job 

Employers often request professional references to verify your work experience. However, sometimes they look for character references, either from your previous employer or from a past colleague or mentor. 

When Securing A Rental Agreement

Landlords often request references from your previous landlord to ensure you have a good history of paying rent. They may also ask for personal references from others to learn more about your trustworthiness. 

First-Time Borrowers Or Newcomers With No Credit History

Whether you’re a newcomer with no credit history or someone with a thin credit file, lenders may ask for a personal reference to assess your reliability and sense of responsibility. Without any credit history, lenders have to rely on these other factors to help assess your creditworthiness.

Borrowers With Bad Credit 

Similarly, if you have bad credit, lenders may request personal or credit references to gain extra insight into your current situation, work ethic, or recent improvements in your financial habits before making a decision.

Learn more: Personal Loan Eligibility Requirements For Bad Credit Lenders


Do This When Listing Personal References

When using a personal reference as part of your loan application, be sure to do the following:

  • Provide Accurate And Up-To-Date Contact Information: If you list a reference with an old phone number or email address, the lender may not be able to reach them when needed. This can slow down your application or even cause it to be rejected. Make sure to double-check your references’ contact details before submitting your application.
  • Ask Permission First: Listing someone as a reference without letting them know can catch them off guard if they’re contacted by a lender. They may not answer the call or provide a good recommendation if they’re not prepared. Always ask for permission first before listing someone, so they know to expect a call.
  • Choose Someone Who Knows You Well: Selecting a reference who doesn’t know you well can weaken your application. Lenders want to hear from people who can provide details about your trustworthiness and responsibility. Be sure to choose references who know you well and can provide accurate and positive information about you.

Final Thoughts

References provide lenders with an additional layer of security before extending a loan. It’s a relatively easy way for you to strengthen your loan application and improve your odds of approval. When providing personal references, make sure you choose individuals who know you well and can vouch for your trustworthiness.


FAQs

Can a reference be held financially responsible for my loan?

No, a personal reference is not a guarantor or co-signer on a loan and has no financial obligation to take over loan payments if you fail to do so. References simply provide character verification.

Will lenders contact my references directly?

Yes, lenders may call or email your references to confirm your identity, employment status, or overall reliability.

Can I be denied a loan based on a reference’s feedback?

Potentially. If a reference brings up concerns about you or can’t confirm certain details, it could affect the lender’s decision.

What happens if I don’t provide a personal reference?

If a lender specifically requests a personal reference and you don’t provide one, they could reject your application or request additional documentation. Other lenders may still proceed without one, depending on your credit profile.

Can I use the same reference for multiple loan applications?

Yes, as long as the reference is willing to be contacted. Make sure to inform them each time you use their name as a reference.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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