Being A Guarantor: Who Can Be One and What It Means

Guarantor loans are when a third party guarantees the repayment of a loan between a borrower and a lender.  A guarantor loan is often needed if a borrower has a bad credit history, or very little, as they agree to repay the money if the borrower ultimately cannot.  They act as a guarantee to the lender that the money will be repaid, regardless of the borrowers situation.  Let’s further look into who can be a guarantor and what it means.

Who Can Be a Guarantor

A guarantor must be someone with a good, well-established credit history.  They must also have proof of steady income, or a substantial pool of wealth from which to draw if the borrower cannot uphold their side of the agreement.  There is no set criteria for loans with a guarantor, as they must be vetted by the lender for that specific loan agreement.

When Are They Necessary?

            A guarantor may be necessary in circumstances where the borrower has bad credit, or none at all.  Guarantor loans often come in the form of a parent guaranteeing a loan repayment between a child and the bank. It’s only natural that when starting out making larger purchases, like a car or a home mortgage, that your credit score will be low, which is the bottom line for the lending institution.  After a consistent period of payments and employment, a guarantor may no longer be needed and the loan can be adjusted accordingly. See more!

Risks Of Being A Bad Credit Guarantor

            As stated before, a guarantor insures the lender that they will make their money back; if not through the borrower, then through the guarantor themselves.  In other words, you may be on the line for the money owed.  Therefore, think carefully before entering into this sort of a deal.  Have confidence in the borrower, and make sure that you yourself can cover that debt if need be.  Additionally, think about the interpersonal ramifications.  Is this arrangement good for the relationship?  Is it good for both parties?

Other Things To Keep In Mind 

            As guarantor loans can be risky, there are a lot of factors to keep in mind.  These range from financial concerns to interpersonal.

      -Is It Necessary- The arrangement will deserve some scrutiny.  Is a loan the best viable option, or would it make more sense for the borrower to instead find another, more self-sufficient method.  This might be the case with a large purchase, but with one fixed payment, like a used car.

-Is This Good For Me?- Make absolutely sure that you can repay the debt if the borrower cannot.  Being approved as a guarantor is not the same as being confident that you can fulfill those responsibilities.  Take a close look at your finances, make projections and take into account hypotheticals.

-Can I Trust This Person?- Think rationally.  This person may be your family, or a very close friend, but that has little impact on the way they handle their own finances.  We would all like to help our closest friends and family out, but sometimes it’s just plain unwise.  Have a frank discussion with them, but make the choice by yourself based on their merits.


From here, you should have a better idea about whether it is a good idea to be a guarantor for an individual.  Before entering into Guarantor loans, make sure you have done your research on both the nature of the agreement and the character of those involved. Click here for more information:

Top five mistakes that damage your credit report


Having a decent credit report is important as it can affect your ability to obtain cash and get credit. Holly Thomas shares the best five mistakes that can affect or harm your credit report. Keeping your credit history record squeaky clean is great practice for anyone who may need to get cash later on.

  1. Different applications

Each time you apply for credit, it appears on your credit report. While it won’t explain on the off chance that you were rejected, various applications for credit cards, for example, could recommend your applications are unsuccessful and could look bad. Indeed, even only two applications in a multi-month time frame could imprint your credit score, making it considerably harder to qualify for a loan.

  1. Old accounts

You may wish to consider shutting any credit card or store card accounts you never again utilize because another moneylender may ask why you want another credit extension in the event that you already have bounty open to you right now. Make beyond any doubt all old accounts are sans obligation. An old unpaid catalog account or cell phone bill could cost you dear.

  1. Bad organization

In the event that you don’t manage your accounts legitimately and miss payment dates for utilities or any other sort of obligation repayment, it will be unmistakable to different creditors and could impact future credit applications. Missed or late payments could indicate that an individual is financially extended or lacks duty in repaying obligations, which means they are probably not going to see you as a good candidate for further getting.

  1. Failing to check your report

A huge number of us have never observed our credit report. Be that as it may, this in itself is a mistake because it merits making beyond any doubt that all the information held about you is right. Where information isn’t right, you should contact the company that put the information on your report, explain the issue and ask for it to be revised.

In circumstances where you have missed a payment through an honest to goodness issue, you can contact the credit reference agency and ask them to attach a ‘notice of redress’ on your report. This will explain when payments were missed because of special circumstances, for example, losing your activity or family bereavement.

  1. Failing to separate finances

Joint finance with a partner will create a formal connection between your credit reports, regardless of whether it’s a mortgage or finance on another sofa. This means that in the event that one of you applies for credit, the moneylender will have the capacity to search the other’s credit report. On the off chance that you split up with or separate from a partner, make beyond any doubt you write to advise the agencies to avoid their potentially bad obligations affecting you later on. More details here:

You should demonstrate that you are never again financially associated by giving proof that you have been living apart for over a half year. In the event that you were married, you should be separated before you can evacuate the formal connection. Any shared services must be settled and shut or they will, in any case, have an impact on your credit report.


For a month to month charge, credit reference agencies like Experian will allow you boundless access to your credit report and will screen it so you are alerted when there are certain changes to your credit report with them.