If you are applying for a new job, an apartment, or applying for a loan of some kind, the importance of reference checks is much more significant than many applicants might consider. Especially depending on what you are applying for, a poor comment or remark from a reference, can greatly reflect on the individual, and on their ability to hold a job, or to make payments on a loan.
As an employer, lender, or other institution, the importance of reference checks is two fold; first, they will save you money, and second, they will save you time (in the long run).
The importance of reference checks for candidates
As a candidate, whether it is a job you are applying for or a mortgage from a home, references are an indicator as to how you acted in previous situations. If you put down a former landlord as a reference on an application for a new home or a rental application, you have to make sure they are going to say good things. From paying the rent on time, to being a quiet individual that did not cause any troubles, these positive remarks are going to greatly impact the potential of you getting the apartment or loan, or possibly losing out on it.
The importance of reference checks for employers/lenders
It is important to check references as an employer. For example, if it is a government position, you have to know the individual applying is not a convicted felon, or doesn't have a prior record. If an individual is applying for a mortgage, as a lender, you want to know they make payments on time, have a good credit score, and are a reliable borrower. The importance of reference checks is that the references you contact, about different scenarios, can give you a great indication about the person you are interviewing or considering for a loan, and the references can help you determine if they are the best candidate or not.
Don't forego checking references
Many employers or lenders forgo checking references due to the time (if they need a new employee right away, the check slows this down) and the cost. But, in the long run, the reference check will save you both time and money. It will help you know you have hired the right individual, meaning you won't have to post another job opening in the near future, and spend more money in training and the hiring process all over again.
The importance of reference checks is both for the applicant, as well as for the employer or lender's benefit. References can give you an indication of an applicant's past, the way they acted in certain situations, and what their past behavior, indicates about them today. So, making sure you have great references lined up, and people who have nothing but good remarks to say about your past, is very important for an applicant to do, in order to ensure they gt the job, or are approved for the loan they are applying for.