Asked by: Roseli Novacicpersonal finance student financial aid
Can being a guarantor affect your credit?
Last Updated: 4th June, 2020
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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.