Final answer:
A credit application requests a previous employer's contact details to verify income and employment history, which helps lenders assess creditworthiness. This verification of information is crucial alongside credit checks and other measures like cosigners and collateral.
Step-by-step explanation:
A consumer credit application asks for the name and telephone number of your previous employer as part of the lender's due diligence process. When applying for credit, lenders need to verify the income sources and employment history of the applicant to assess their creditworthiness and ability to repay the loan.
By contacting a previous employer, the lender can confirm the applicant's employment tenure and salary information, which are critical factors in making lending decisions. It also serves as a way to validate the information provided on the application. Moreover, lenders conduct a credit check to evaluate past borrowing behaviors, and may require additional safeguards like a cosigner or collateral to secure a loan.
Consumers should always provide only the minimum necessary information and understand the purpose of its collection, while also monitoring their credit history for signs of identity theft or fraud.