Have you ever fallen in love with an apartment, and then decided against applying for it because you felt that you wouldn’t be able to meet the requirements of the lease terms and policy?
This isn’t an uncommon situation for new renters (e.g. college students, recent graduates) and individuals with poor credit or rental history. Landlords prefer responsible renters, and they make an evaluation on basis of your job, income, credit score, and rental history, among other factors. In case of new renters, there is very little by way of past credit and payment information, so they tend to be at a disadvantage. People in low-earning jobs may also find themselves in a similar situation.
What’s the solution? Enter the guarantor.
A rent guarantor is the legal term for an apartment co-signer, or a person who agrees to bear the financial obligations under terms of the lease. To put it simply, this person is responsible for ensuring that the rent on the apartment is paid. They are also responsible for fees towards any other damages (beyond normal wear and tear) that occur in the apartment. Many landlords will notify you if you need a guarantor. However not all landlords do, and therefore it’s important to keep this option in mind. If, for whatever reason, you fall short of the lease requirements, a guarantor may be able to help reduce the stress of applying.
In many cases, landlords prefer guarantors who live nearby or who earn a significant amount of money (relative to the monthly rent). Landlords commonly require a guarantor to earn at least 80 times the rent amount. However, this varies based on location and landlord. In metropolitan areas with large rental markets, there may also be programs that act as stand-in guarantors for a one-year lease. In New York City, The Insurent Lease Guaranty Program is a unique program providing institutional guarantors to creditworthy college students, non-U.S. residents, retired individuals and other tenants in need of a little help. Other guarantor services you can consider include Leaselock and American Cosigners. These programs require an average credit score and a lower required annual income, bringing many renters one step closer to signing a lease.
When you request someone to act as a guarantor, be aware that you are asking for a big favor. If you are unable to make rent payments, they will step in on your behalf and ensure that is taken care of. If you are regular with rent payments, your credit score will be boosted but there are no benefits to the guarantor. When you discuss a lease with a potential guarantor, it’s important to explain that you will likely need personal information some of which may seem invasive (such as your guarantor’s recent tax returns, a letter of employment, recent pay stubs and/or recent bank statements). Signing a lease with a guarantor legally binds both of you to the lease, so be honest and explain exactly why you need them to co-sign your rental lease.
A guarantor/guarantee relationship is based on trust and confidence, so be sure to ask someone you are close to. Regardless of your financial situation or type of guarantor you choose, remember to thank them after the lease is signed, and respect your promise.
Now, if you are unable to find a guarantor, here are some options to consider.
- Find a smaller apartment complex or a locally owned room for renting. You may find that the lease requirements are less stringent.
- Present your case to the landlord. There are many reasons someone could have a low credit score or poor payment history, and not all of them are in one’s control. If you are able to make a strong case for yourself, your landlord may be persuaded to lease you the apartment.
- You may still be able to rent the apartment by paying a larger security deposit, or by paying rent for several months in advance.