What Does It Mean to Be a Guarantor?


Acting as a guarantor is one way for more established family members to offer a helping hand to those still trying to find their financial feet. It’s typically used in the context of rent payments, and means signing on to pay somebody’s rent if, for whatever reason, they miss a payment. It can also be used to help people take out other types of credit and loan.

Why might somebody need a guarantor?

A guarantor is usually required if somebody wants to sign up for rent or a loan without the necessary income to do so. It can also help somebody with a poor credit rating be accepted as a tenant or credit applicant. Essentially, it means that the lender or landlord can feel secure that there is a back-up option.

Who can become a guarantor?

You will need to be financially secure in your own right before you can act as somebody’s guarantor. Typically this will mean that you need to have an income that is over a certain threshold, and you may need to own your own home, too. Finally, your credit will be checked alongside that of the applicant, so you will need to have a relatively strong credit rating.

How long does a guarantor contract last?

It will typically last the entire length of the loan or tenancy – until the tenant moves out or the last repayment is made. If you change your mind at a later date then you may be able to withdraw your guarantee, but this is not always a simple process, so keep in mind that becoming a guarantor is a long-term commitment.

Will it affect my credit rating?

Assuming that you’re not called upon to make repayments, becoming a guarantor should have no impact on your finances or your credit score. This means that it shouldn’t affect your ability to apply for a loan or mortgage, either. If something goes wrong and you do end up becoming burdened with paying back the money yourself, then your credit report will be impacted by any payments that are missed.

What happens if a guarantor misses a payment?

Aside from the hit on your credit history, there are other more serious consequences to a missed payment. In the case of a tenancy, if both the tenant and the guarantor are unable to pay then the landlord is likely to start the eviction process. And with all kinds of loan, there may be court action – including a possible CCJ – if nobody is able to pay.

Should I agree to it?

This is a decision that you’ll need to make for yourself. Typically, it is only advisable to sign up as a guarantor for somebody that you know well, as your financial lives are about to become linked. You should feel confident that they are willing and able to make the payments themselves, and you should feel comfortable that you can afford to make repayments if things go wrong. The idea behind being a guarantor isn’t that you should have to pay – you’re simply there as a last resort for the lender. With this in mind, have a frank conversation with anyone who asks you to become your guarantor before agreeing to sign up.

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