What is a guarantor?
A guarantor is a person or organisation who agrees to pay for something – such as credit repayments or rent – if you can’t. When someone agrees to be a guarantor, they’ll need to sign a legally binding contract.
It’s best to think of a guarantor as someone who’s vouching for your ability to pay the costs you’ve agreed on. They should only pay the costs themselves as a last resort.
Why would I use a guarantor?
If you’re struggling to get accepted for accommodation or credit on your own, using a guarantor can increase your chances.
For example, you might find it hard to get accepted if you:
Have a low credit score.
Are young or new to the country
Don’t earn enough
Have an irregular income
These things can make a lender or landlord worry that you’ll miss payments. But a guarantor gives them reassurance that they’ll get the money they’re owed – even if you can’t pay it out of your own pocket.
Guarantors are often needed for student accommodation, since students usually have a small income and not much credit history.
Who should be my guarantor?
This depends on what you’re using a guarantor for, and who your landlord or lender is willing to accept. Here are three main examples:
Someone you know
This is a common option for both credit and rent agreements. Lenders and landlords often ask for a guarantor who:
Is aged 18 or over
Lives in the UK
Has a good credit rating (as this shows they’re responsible with money)
Owns a house or car (which can be used as security to ensure the company gets its money back)
Isn’t your spouse (particularly if you share finances)
Being a guarantor is a big responsibility, so you’ll need to find someone who trusts you and is willing to help. Many people choose a parent, sibling or close friend.
Some universities and colleges have guarantor schemes to help you rent private student accommodation. You may need to meet certain conditions to use the scheme, such as a good academic record, a reference from your hall of residence, and enough income to cover your rent.
A private company
If you can’t find a person or university to guarantee your rent, there are companies that’ll do it for a fee.
However, these companies usually ask for a co-signer. This is someone who’ll pay the costs if you can’t – much like a guarantor. The difference? Many of these companies don’t check the co-signer’s credit history, so they may accept people who can’t become a guarantor.
You should also know that even if the company pays the landlord for missed payments, it has the right to try and get the money back from you.
What if I can’t find a guarantor (or don’t want one)?
Finding a guarantor can be difficult. And even if someone agrees to it, you may worry about putting strain on your relationship with them. Luckily, there are some alternatives you can explore:
Guarantor alternatives for renting
Ask to pay three to six months’ rent upfront. Like a guarantor, this lowers the risk that the landlord won’t get their money.
Offer a larger deposit. The landlord should be able to take any missed payments out of this. Just make sure it’s protected by the Tenancy Deposit Scheme.
Look for cheaper accommodation. The more easily you can cover rent with your income, the less risk there is for the landlord (and the less they’ll need a guarantor).
Guarantor alternatives for taking out credit
Compare lenders to find the best credit offers that don’t require a guarantor.
Consider borrowing less to help you get approved without a guarantor.
Try and improve your credit score if it’s reducing your chances of getting credit.
Think about using your home or car as security. This can be a different way to reduce risk for the lender.
Self-employed? Irregular income? Prove you can afford the repayments by showing the lender several years worth of accounts.
What are the risks of being a guarantor?
Being a guarantor can be a nice way to help out a relative or friend. But it’s also a big responsibility, as you’ll need to cover their payments if they can’t.
If you can’t make the payments either, the landlord or lender may take legal action. For example, they might get a County Court Judgment issued against you – or, as a last resort, claim your home as security.
This doesn’t mean you shouldn’t be a guarantor, but it’s best to only guarantee payments you can afford. Make sure you trust the person you’re vouching for too, and consider offering to help them budget.
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