When you’re on the search for a new apartment, there are plenty of important things you need to consider before signing any lease. The first step requires you to put in an application, which needs to be approved by a landlord or property manager.
These rental applications often require you to submit a background check, proof of income, credit history and more. However, there are cases where you may not have the financial proof to qualify for the property. In this case, a guarantor may be your best option to help land you your dream apartment.
So what is a guarantor? A guarantor is a person with good credit who agrees to co-sign, or sign on behalf of someone else and is responsible for the rented space, its condition, the rent and any fees that may be incurred over the rental period.
When do you need a guarantor for a lease?
Landlords want to be sure they bring in tenants who are responsible, will care for the unit and will be timely with rental payments. A landlord may be hesitant to rent to a prospective tenant if they have:
- Poor rental history: If you are a first-time tenant, you’ll most likely need a guarantor to sign your lease with you since your new landlord doesn’t have any idea how you are as a renter. On the other hand, if you’re a long-time renter with a bad reputation as a tenant, landlords will have a hard time trusting you, which is where a guarantor can help increase your chances of getting approved.
- Bad credit: Having little or bad credit is a common reason to get a guarantor to help you with your lease. If you have bad credit, bigger apartment complexes with property managers may be wearier to approve you. However, landlords of smaller complexes or units may be more lenient, especially if you have a guarantor.
- Low income: A good rule of thumb when you are looking for a new place to rent is that the cost per month is around one-third of your monthly income. If the rent is more than that, then your landlord or property manager may require you to have a guarantor on your lease.
- Bankruptcy on your credit report: You can’t hide a bankruptcy report, as it can stay on your credit report for seven to 10 years. Bankruptcy may look like a red flag to landlords, but having a guarantor on your lease can help alleviate the concerns your landlord may have associated with the past bankruptcy.
- You have a prior eviction: If you have a bad reputation as a tenant, like a prior eviction, then landlords may require you to have a guarantor. No matter what the reason might have been, evictions may make landlords feel uncertain to approve you. Having a guarantor on your lease can help increase your chances of getting approved for a rental.
- Unreliable employment history: If you have an unreliable employment history, it could make landlords hesitant to approve your application. Landlords want to make sure that you have a steady income so that you’ll be able to afford rent each month. If you have a past of employment gaps or terminations, having a guarantor on your lease may be a requirement.
A guarantor can solve some of these problems by guaranteeing to the landlord that if you're unable to pay for rent or repairs, it will still be taken care of.
What does it mean to be a guarantor?
If you sign up to be a guarantor on someone’s lease you are guaranteeing that you will pay their rent if they fail to make it on their own. Essentially, a guarantor pledges their own assets as collateral against a loan, or in the case of apartment hunting, rent.
Who qualifies as a guarantor?
Almost anyone can qualify to be a guarantor. Usually, it’s a family member, friend or colleague that personally knows you and trusts that you’ll be able to make the payments necessary to afford rent. However there are a few guidelines to be aware of to ensure that your guarantor qualifies:
- He or she should have a good credit history
- A guarantor is usually over the age of 21
- The guarantor has a separate bank account than the borrower
If you want your spouse to be your guarantor, they must follow all of the qualifications above including having good credit and a separate bank account — they should not be financially linked to you.
Guarantor vs. cosigner
Like a guarantor, a cosigner is a second person who signs the lease to help assume financial responsibility. However, a co-signer has more rights under the lease and can live in the apartment as a tenant.
Unlike a guarantor, a cosigner is entitled to live in the apartment and is equally responsible for splitting the rent and fees associated with the rent. A guarantor takes on the financial responsibility for an apartment, but is not entitled to use the apartment as a tenant.
What to do if you’re unable to find a guarantor
If you find yourself in need of a guarantor but have no one to turn to for help, you still have options. Whether you have bad credit or poor rental history, here are a few options to consider if you’re in this situation.
Use a guarantor service
If you don’t have a friend or family member that qualifies to be your guarantor, a guarantor service could be a good option for you. These are companies that offer the service of acting as your guarantor so that you’ll be able to land your dream rental, taking out the hassle of trying to find a suitable guarantor to add to your lease.
Think like a landlord
Your landlord doesn’t know you, so it’s understandable for them to be wary of letting you sign a lease, especially if you have bad credit or poor rental history. However, there are plenty of reasons this may be the case. If you have extenuating circumstances that have contributed to a lack of approval, present your case to the landlord. If you present yourself well, there’s a chance a landlord might be willing to let you rent with a guarantor.
Alter your expectations
It’s understandable to want the high-end apartment complex with a fancy pool, but if you’re in a situation where you can’t sign without a guarantor then you may need to alter your expectations. Look for a smaller apartment complex or a locally-owned rental unit. These types of rentals tend to have more flexible rules than corporate-owned apartment complexes since they are usually run by locals or an individual.
Pay more upfront
If your issue is bad credit, make a great first impression by offering to pay more upfront. You could potentially pay two months or more worth of rent or offer to invest a larger security deposit. This strategy shows landlords that you have the money needed to pay the rent and could potentially serve as a buffer if you end up having financial challenges in the future.
Increase your chances of getting your lease approved with a guarantor
Guarantors aren’t always necessary, but they are great options for those who have bad credit, poor rental history or low income. If you know your rental or credit history needs some work before it would qualify you for your dream rental, see if you can get a family member or friend to be your guarantor.