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Are you having trouble getting an apartment on your own? If you haven't held a job for long, have a low income or have never rented an apartment before, potential landlords may want more reassurance that your rent will be paid as agreed. A guarantor can provide that assurance and could help you go from denied to approved without having to walk away from the rental of your dreams. Keep reading to learn more about what a guarantor does, when you might need one and how they can help you.
What Does a Guarantor Do?
Some landlords or property managers require select applicants to have a guarantor, or someone who agrees to cosign the lease and assume financial responsibility for the unit. The terms "guarantor" and "cosigner" are often used interchangeably, but they aren't quite the same.
A guarantor is responsible for the rent and any other charges incurred during the lease term if the tenant cannot pay. However, this individual doesn't live at the property or have a right to occupy it. A cosigner, on the other hand, is a roommate or spouse of the tenant that lives in the apartment. They also sign the lease and are responsible for rent payments, but have a right to occupy the unit.
When You May Need a Guarantor
There are several reasons you may need a guarantor to get your rental application approved. Common red flags that may lead a landlord to require a guarantor include:
- Credit issues: If you have little or no credit history, bad credit or a bankruptcy on your credit report, the property manager or landlord may have reservations about your ability to make timely rent payments.
- No rental history: Many landlords or property managers require first-time tenants to have a guarantor. Once you've built up your rental history, you can possibly lease elsewhere without a personal guarantor.
- Unstable employment history: Frequent gaps in your employment history could equate to income problems in the near future. Or, if you are a college student without a full-time job, the landlord may want a guarantee that your rent will be paid, even if you have student loans or savings to cover rental costs.
- Minimal income: Many landlords require the household income to be at least three times the monthly rent to ensure the tenant can afford rent payments and other living expenses. Landlords or property managers will request proof of income and may confirm this information with your current employer.
This list is not all-inclusive, and you will be notified if you need a guarantor once your landlord or property manager reviews your application. You can also ask the leasing agent about general qualification criteria for renters before you apply for an apartment to know if you should start looking for a guarantor.
If you plan to live alone and can't get approved for an apartment on your own, you may be left with no choice but to find a guarantor. But if you don't mind having a roommate to help save money, you may not need a personal guarantor if they meet the qualification criteria for the unit.
How to Find a Guarantor
Parents, close relatives and friends are a good place to start when you're looking for a guarantor. Anyone you ask should be at least 21 years of age, financially stable and have good credit. It's also a plus if they currently own a home. They will typically be required to complete a rental application, submit income and financial documentation and undergo a credit check.
Having trouble finding a personal guarantor? There are guarantor services that can help you get the keys to your new apartment—but you'll pay for the convenience. This option generally costs between 4% and 10% of the annual rent, and the fee is payable before signing the lease. So, a $1,500 rental on a 12-month lease with a 7% fee from a guarantor service will cost you $1,260 annually. If a guarantor service is your only option, shop around and carefully review each company's policies and fees before moving forward.
Rent With Confidence
It's possible to avoid surprises when applying for an apartment. Reach out to the landlord to learn more about the income and credit qualification criteria before you get your heart set on a place. Also, check your credit report and FICO® Score☉ for free through Experian to know where your credit stands. If necessary, take time to improve your credit before you apply.
If your credit health is up to par, you meet the income requirements and you don't have an adverse rental history, you shouldn't have much trouble getting your apartment application approved. But if you need a guarantor, consider parents, family members or close friends who meet the qualifications and know that you'll follow through on your lease agreement. Once you have that guarantee in place, your new landlord will likely be more comfortable handing over the keys.