Asked by: Roseli Novacic
personal finance student financial aid

Can being a guarantor affect your credit?

Last Updated: 4th June, 2020

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Does being a guarantor affect my credit rating? Providing the borrower keeps up with their repayments your credit score won't be affected. However, should they fail to make their payments and the loan/mortgage falls into default, it will be added to your credit report.

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Then, can being a guarantor affect me getting a mortgage?

Being a guarantor shouldn't affect your ability to get a mortgage, unless you're then called upon to make repayments. Since you would be inheriting the debt, this will put you at risk of not being able to repay and this can ultimately decrease your credit score if you don't keep up with repayments yourself.

Furthermore, what happens if a guarantor refuses to pay? In the event that your guarantor is able to technically pay, but decides not to when they have been called upon to do so, then they are breaking the contract that they signed to with the lender and borrower. If no payment is made, the lender has the legal right to start a court order in order to retrieve the debt.

Also, can you get out of being a guarantor?

The most simple way to get out of being someone's guarantor is for the main borrower to pay off their loan and essentially, terminate the agreement. Unfortunately, another way to get out of an agreement is if the individual is no longer alive.

What happens if your a guarantor?

If you agree to be a guarantor then you are taking on a serious risk and will be responsible for paying a debt if the borrower can't or doesn't. It is important to know that, if the borrower defaults, the lender is entitled to come after the guarantor (you) for repayment before they go to the borrower.

Related Question Answers

Corrie Vyborny

Professional

How do I remove myself from being a guarantor?

Steps
  1. Speak with your guarantor. Talk to your guarantor about why you would like to remove her or why she no longer wants to act as your co-signer.
  2. Review the terms of your loan.
  3. Schedule a meeting with your lender.
  4. Explore your options.
  5. Make the best decision for you and the guarantor.
  6. Renegotiate the terms of your loan.

Vivencio Diveev

Professional

How much does a guarantor have to earn?

How much does a Guarantor have to earn? The standard amount tends to be three times the annual rent. Slightly higher than tenants, generally because they have their own dependencies/financial obligations.

Didina Miarritze

Professional

How long is a guarantor liable?

If this is the case, you will be legally responsible if the tenant breaks any of the promises they made in their tenancy agreement before the tenancy ends and will remain liable for a period of six years from the date they break their promise.

Shaunta Nifterik

Explainer

Can I be a guarantor if I have bad credit?

If your guarantor is not a homeowner, then they will need to have good credit. Guarantors with bad credit will not be strong choices to guarantee a loan. The borrower can have bad credit in the past, or even no credit, but the guarantor is the strength of the loan, and as such does need to have good credit.

Willene Ozalla

Explainer

What a guarantor needs to provide?

A guarantor needs to provide the same documents as a renter: two pay stubs, two bank statements, one or two tax returns, and a letter from his or her employer. If the guarantor owns his or her own business, a certified public accountant (CPA) must provide a letter stating the guarantor's income.

Wenxin Etxabarria

Explainer

Does a guarantor have to be working?

A Guarantor must be working AND a homeowner. This is because they need to be able to afford the rent as if they were paying it anyway. It is also important to note that your Guarantor must earn at least 30x the monthly rental income per annum.

Gersom Imedoev

Pundit

How do I stop being a guarantor for a loan?

Four Ways to Quit Your Role as a Loan Guarantor
  1. An additional loan is granted without your consent.
  2. A substitute guarantor for the loanYou may also approach the bank with an application for a release if there is a substitute guarantor for the loan.
  3. Get the borrower to pay back.
  4. Take legal action.

Inass Janusz

Pundit

Can two tenants have the same guarantor?

Yes, it is normal. But you are right to be cautious. As a single "joint and several" tenancy, there is no legal division of rent between the joint tenants. They are jointly responsible for paying the FULL rent, and so are their guarantors.

Audelina Inhet

Pundit

Can a guarantor withdraw his guarantee?

1) You have to see the guarantee deed. Normally, the deed should contain something like "the guarantor shall not revoke/withdraw his guarantee without the prior written consent of the bank in writing." This means that the guarantor can withdraw his guarantee if the bank chooses to let him do that.

Jamison Middlesworth

Pundit

Can a guarantor loan be written off?

A guarantor loan is an unsecured debt. As such it must be included if you go Bankrupt. As far as you are concerned it will be written off with all your other unsecured debts. However if they cannot the loan company can take legal action against them to force them to pay.

Melitona Ortegon

Pundit

What happens if my loan guarantor dies?

If the Principal Debtor defaults on the loan, the debt becomes the Guarantor's responsibility, and it could mean the Guarantor may have to sell their own home to service or clear it. In the event a Guarantor dies during the term of the guarantee, the debts do not die too.

Mamun Alconada

Teacher

Does guarantor have any rights?

Does a guarantor have any rights? If you become a guarantor you might think that you are signing your life away – and you may be wondering if you have any rights. The answer is yes and no. For starters, being a guarantor means that you have an obligation to cover any payments that are not made by the main beneficiary.

Norine Jephthah

Teacher

Can a guarantor take you to court?

If your guarantor doesn't pay, your landlord can take them to court. Your landlord might want to check your guarantor is able to pay the rent in the same way they've checked your ability to pay.

Dia Baiget

Teacher

Can guarantor evict tenant?

A guarantor on an apartment lease agrees to pay the rent if the tenant can't. If the guarantor can't pay, the consequences can be serious for both tenant and guarantor. The landlord can evict the tenant and initiate collection action against the guarantor.

Yennifer Turnham

Teacher

How do you ask someone to be a guarantor?

How to Ask Someone to be Your Guarantor
  1. Do it face to face. Asking someone to be your guarantor is all about trust, so don't ask over the phone or via WhatsApp.
  2. Don't assume they'll say yes. Asking an individual to guarantee your loan is a big favour to ask, so don't approach your prospective guarantor as if they're going to say yes.
  3. Present a repayment plan.

Gaspara Heemskerk

Reviewer

What happens when you can't pay a loan?

If You Don't Pay
If you stop paying on a loan, you eventually default on that loan. The result: You'll owe more money as penalties, fees and interest charges build up on your account. However, you do need to pay attention to legal documents and requirements to at least appear in court. That's the worst that can happen.

Aguasantas Pitschke

Reviewer

Can my husband be my guarantor?

Yes, a partner or spouse can be your guarantor, however there are a few caveats here. Your partner or spouse will need to have good credit as a guarantor, and they cannot be linked to you financially. If your spouse is a homeowner, and has no financial ties with you, then they could be a perfect guarantor.

Carolina Beiersdorfer

Reviewer

What is the risk of being a guarantor?

The main risk of being a guarantor is that if the main customer defaults on a consumer product, you are required to pay the bill. The outstanding debt is not just the loan amount, but also the interest too – meaning that a £15,000 loan over 3 years could cost a total of £24,000.

Sherley Chandan

Reviewer

Do you have to give bank details to be a guarantor?

As a guarantor you are saying that you will cough up any money that your daughter defaults on, so yes they need your bank details, else you could back out as well if money was owed.