Bank Reference

What is a bank reference?

A bank reference is a bank manager’s written opinion of their customer’s credit standing. Usually they are produced in such a way that people outside of the banking world cannot decipher the message’s true meaning.

Bank references predate credit reports and were once the only way of checking out the creditworthiness of a consumer. They remain a valid way to check an individual’s credit standing, but they are infinitely less detailed than a credit report.

How it works

Your bank will write to the bankers of the third party, asking for their opinion of the person or company, and whether they are good for an amount (e.g. £5,000) and for a purpose (e.g. trade credit).

A typical bank reference reply might read ‘Respectable and Trustworthy, considered good for your figures and purpose’.

This is where the internal code comes in: small variations in the language used can have a dramatic effect on the meaning.

In short:

Respectable’ means all the usual money laundering checks and references were made when the account was opened. Less strong alternatives include ‘Respectably introduced’, and the weakest is if you don’t see the word ‘Respectable’ at all.

Trustworthy’ means that the customer usually only issues cheques when there is a reasonable chance that there are funds behind them, and also that if a customer has said they will pay in regular instalments, they will do so. Omission means the opposite.

Considered good’ means pretty much undoubted. ‘Should prove good’ means the customer is under pressure but hasn’t made a mess of his or her finances before, so should be OK. ‘We do not think this person would enter a commitment they could not see their way clear to fulfil’ means the opposite of this: there’s a real risk of default, but the bank would not phrase this as such.

Look out also for ‘The bank has a debenture’. If the bank has one, it has to tell you. If it has one, it can pull the rug at any time and you’ll have little chance of recovering your money if things go wrong.


Q: How can I get a bank reference?

A: To obtain a bank reference on another person or company, you need to ask your bank to make a ‘status enquiry’ on their bankers. This means that you need to know who their bankers are. You can find that from a cheque (if you have a cheque) or by simply asking the other person or company for the details.

Q: Are they still carried out?

A: Yes, but for most consumer transactions your credit report will be checked by the lender. While they both achieve the same goal, your credit report gives the lender much more information to go on, and they will have their own internal credit scoring system to work out the likelihood of you defaulting on payments based on this.

For a clear, detailed view of your credit standing that lets you see exactly what lenders see, you can try checkmyfile’s Multi-Agency credit report absolutely free for 30 days, then for just £14.99 a month afterwards. You’ll get total access to the UK’s most-detailed credit report, with information from 4 Credit Reference Agencies, not just 1.

Jargon Buster

Use the links below and the resulting list of terms on the right to locate the term you are looking for. If you can't locate it, please get in touch.

A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews