At some point in your life, you may need a little help in the finance department. When you rent your first apartment, this is not uncommon. Considering that you usually have to put down first and last month's rent, as well as a security deposit on top of all the other moving expenses, this can be a pretty costly endeavor.
I definitely needed help when I was a sophomore in college to escape dorm life (it wasn't all it was cracked up to be) and rent an off-campus apartment with two friends. I had zero credit and no job. However, as a 19-year-old, I was lucky enough to snag the apartment (soon to be party central) thanks to a friendly rent guarantor: my dear old dad.
What is a lessor?
A rental guarantor is someone who signs a lease with you, the tenant, knowing that they are legally obligated to assume any financial liability if you cannot pay, be it for your rent or damages. For college students and young adults, a guarantor is often a parent or guardian.
Landlords usually prefer that the guarantor has an income equal to 80 times the monthly rent NerdWallet , to ensure that the guarantor can cover your costs in addition to his own in case of intervention.
Depending on the landlord, the guarantor may be required to be with you in person when you apply for the lease; At the very least, you will need paperwork from them proving their income.
What is the difference between a guarantor and a co-signer?
While some people use the terms guarantor and co-signer interchangeably – since both sign a lease along with a tenant and assume some financial responsibility – there is a difference.
A guarantor signs the lease knowing that they will not be living in the house; They simply support you, the tenant, in case of emergency. A guarantor is basically an insurance policy for the landlord so he doesn't get stiffed on payments.
However, a co-signer is a second person – a tenant or roommate – who is responsible for splitting the rent payment with you and will also live in the unit. They also typically have more rights under the lease than a guarantor, according to ApartmentGuide.com .
Does the guarantee on a lease affect your credit score?
Whether you want to ask someone to be a rental guarantor or do someone the favor of being one yourself, you're probably wondering if there are additional risks associated with the deal.
A guarantor won't hurt their credit score simply by having a lease with someone. However, if the primary tenant can't pay his lease or defaults and the guarantor can't pay the amount owed either, both people will lose their credit according to The Street . The default is reflected in their credit reports for seven years.
Also, if you're a guarantor for someone and If you're looking to buy a home, it can be difficult to secure a mortgage, so The Road . A potential lender may consider you an unattractive candidate for a mortgage because you may have to pay money on that lease as a guarantor, which may prevent you from paying your mortgage.