What Is a Guarantor and When Do You Need One?
When it comes to renting your own flat, lenders and landlords may ask for a guarantor. But what is a guarantor, and when do you need one?
In this blog, the Pave team will answer these questions, including who can be a guarantor, why they're needed, and what you can do if you can’t find a guarantor. If you’re renting for the first time, or will be soon, keep reading to be prepared if you’re asked for a guarantor. Let’s get into it!
What Is a Guarantor?
A guarantor is a person who’s responsible for your rental payments if you don’t pay them. Having a guarantor is incredibly common, and almost everyone needs to use a guarantor at least once. Guarantors can be also used for loans, mortgages, and other lines of credit, but they’re most commonly used if you’re renting a flat for the first time or otherwise have low credit.
What’s the Difference Between a Guarantor and a Reference?
References are used by landlords to learn more about you when you apply for a unit. Common references that landlords will check include:
- Your bank
- Your employer
- Prior landlords
- Credit reference agencies
- Electoral Roll
References are primarily used to confirm the information on your application, ensuring that you are who you say you are, and to verify that you can make the rental payments.
Guarantors, on the other hand, are primarily responsible for your rent if you fall into arrears. The landlord may request references from your guarantor to ensure they can follow through with any necessary payments.
When Do You Need a Guarantor?
Guarantors are typically needed if you have a thin credit file, poor credit, or are considered low income. It’s very normal to need a guarantor when applying for a flat if you are:
- Moving into your own flat for the first time, or otherwise have no credit or low credit
- Unemployed, and sometimes if you’re self employed
- New to the UK
Who Can Be Your Guarantor?
A guarantor can be anyone over the age of 18 with a good credit rating and regular income. Parents and close relatives frequently act as guarantors, but almost anyone can be your guarantor as long as they are willing to sign legal documents and be responsible for payments if you fail to make them.
Guarantors are usually required to provide their address, their employer, and their income. They’ll also need to submit bank statements proving that they are financially stable, and may have a credit check performed as well. Additionally, guarantors are typically required to live in the UK, as landlords have less legal recourse if a guarantor doesn’t live in the UK.
Regardless of who you ask to be your guarantor, it’s essential that you ensure they are fully aware of the extent of their commitment. Some things to keep in mind as you ask someone to be your guarantor are that they will be responsible for:
- The entire rent even if you are living in a shared flat. This means it’s essential your guarantor not only trusts you, but also trusts your flatmates
- Rental arrears for the full duration of the rental agreement, so they are responsible for much more than just a rental deposit
- Every cost associated with your tenancy, including utilities, taxes, and damages or repairs
What if You Can’t Find a Guarantor?
Everyone’s life is different, and many people don’t share the same circumstances. Where many simply turn to their parents or family when they need a guarantor, some may not have that option. Fortunately, there are still options available even if you can’t find a guarantor.
Depending on the landlord, you may be able to avoid using a guarantor by paying a larger deposit, or by offering to pay several months of rent upfront.
If you are struggling financially, or simply can’t afford those options, your local council may be able to help you secure housing without a guarantor.
Additionally, if you’re a student, you might be able to turn to your university for help. They may be able to provide information on local landlords or letting agents that don’t require guarantors, or connect you with financial support services through the university.
Get Started Building Credit With Pave
Needing a guarantor often comes at a very exciting point in your life. Moving into your own flat can be a very affirming experience, and using a guarantor helps make the process easier.
As you become increasingly independent, your credit becomes more and more important, but it can be difficult to start building it. That’s why we designed the Pave app. Pave helps people with no credit and low credit build healthy credit scores the right way.
Through active credit building like reporting your timely membership payments to credit reference agencies, bills monitoring to help you avoid missing payments, and personalised credit fixes, we make credit building easier than it’s ever been.