There are many things to think about when selecting someone to be a guarantor for your loan. Firstly your guarantor should have a good credit history because this person will be credit checked by the lender and the stronger their credit file this adds value to your application. You as an applicant may get credit checked but this should not be a problem if you have a bad credit history because this is mainly done to see if you can approved on your own merit but if you don’t this is why you have a guarantor who can support and back your application. There will be occasions that some lenders require the guarantor to be a homeowner but tenants are welcome please check each lenders individual pages as this will vary.
Who To Choose As a Guarantor
Selecting a person to be your guarantor should be very simple. This person should be someone who trusts you and believes that you will meet all repayments of the guarantor loan. The most popular form of getting a guarantor is asking a member of your family, a close friend or even a work colleague who you have a close relationship with. You must make your guarantor aware that you are applying for a guarantor loan as they will need to sign paperwork and a representative will want to speak to them so they understand the risks if you are unable to pay. The lender will also ask your guarantor for identification documents and bank details as the funds will more than likely be credited to their account for security purposes.
Improving Your Credit Score
What you will find if you keep up with your repayments that you can rebuild your own credit history as the lenders with make a note with credit reference agencies that the individual is making all payments and on time. Repaying the loan does not mean you will get a perfect credit score by the end but it helps to slowly improve your own personal credit history and who knows in the future you may be able to obtain credit under your own name without the need for a guarantor but be advised if you miss payments or payments are late then this will have a negative impact on your credit score and you may run the risk of your guarantor paying your loan for that month so always keep the lender informed as well as your guarantor.