So, pretend you’re wanting to rent an apartment in Phoenix, considering renting a house in Denver, or looking to move into a brand-new condo in Portland – and it’s time to submit your rental application. However, your poor credit history doesn’t qualify you to sign the dotted line alone, or maybe your income doesn’t meet the required threshold.
Depending on your circumstances, you might need someone else to co-sign your lease to qualify for the apartment. This ApartmentGuide article will help you understand the situations where a co-signer might be necessary and explain how having one can help you secure the rental you want.
What is a co-signer for an apartment?
A co-signer is a third-party, usually a person closest to you or a friend, who co-signs the lease with you. This person typically has a stronger financial standing,, has a robust credit history, and a good credit score.
As a co-signer, this third party has a legal obligation to pay if you default on your monthly rent. They don’t have to live in the apartment, but their name will be on the lease.
This arrangement serves as insurance for your potential landlord, especially if your credit check reveals a low credit score or an eviction history. It’s important to note that a co-signer is different from a guarantor, who merely promises to cover the rent if you fail to pay.
What does it mean to co-sign an apartment?
Co-signing an apartment means that you, as the co-signer, agree to share legal responsibility for the lease along with the primary tenant. As a co-signer, you are vouching for the tenant’s ability to pay rent and adhere to the lease terms. This includes covering any missed rent payments and potentially any damages to the property. Although you won’t reside in the apartment, your credit and financial history will be assessed during the application process.
Co-signing is a significant commitment because it involves a serious financial obligation to support the tenant and provide assurance to the landlord. If the tenant fails to pay rent or damages the property, you will be responsible for covering these costs. This means that any default by the tenant can affect your credit score and financial standing. Therefore, it’s essential to fully understand the risks and responsibilities before agreeing to co-sign an apartment lease.
When do you need a co-signer for an apartment?
But when exactly do you need a co-signer to secure your lease? Let’s explore the scenarios where having a co-signer might be necessary.
You might need a co-signer to secure an apartment lease if:
- Low credit score: A credit score that falls below the landlord’s minimum requirement.
- Insufficient income: Monthly income that doesn’t meet the landlord’s criteria, often less than three times the rent.
- Lack of rental history: Little to no previous rental experience, especially for first-time renters.
- Past evictions: A history of evictions on your rental record.
- Unstable employment: Short-term employment history or frequent job changes.
- High debt levels: Significant existing debt that impacts your ability to pay rent.
- Citizenship: New to the country with no established credit or rental history.
- Self-employment: Income that is harder to verify, such as being self-employed or freelance work.
Who should you ask to co-sign your apartment
The first people to approach are loved ones or close friends, who would be willing to do it.
It’s vital that they trust you, but you also trust them. They will have the same legal right as you to the apartment. This includes the ability to access the space, transfer the lease, and potentially live there if they choose.
It’s important to have an open and honest conversation with potential co-signers about your financial situation and the responsibilities they will be taking on. This ensures that they are fully aware of the obligations and risks associated with co-signing your lease. These risks include being held liable for missed rent payments and potential damage to the property, which could impact their own credit score and financial stability..
You should also discuss every scenario you can think of with your potential co-signer to ensure this won’t destroy your relationship. Signing a legal agreement to take on someone else’s significant amount of debt isn’t a simple favor.
What is needed from a co-signer for an apartment?
Now that you found someone to offer support and help you pay your rent, what do they need to complete the process?
The property manager will require the co-signer to submit a rental application, a background check, proof of income, and a report from at least one of the credit bureaus for a credit check.
Proof of income will include at least two documents to verify that the co-signer’s income covers their own housing and the tenant’s. They will confirm the co-signer paid all previous bills, there are no past evictions or issues with their credit.
What’s the difference between a co-signer and a guarantor?
You may hear these terms interchangeably, but there are some fundamental differences. Think of co-signing as just another person who has access to the apartment and is held responsible for the rent. Every month, both the co-signer and the tenant are equally accountable for the money as they are both on the lease.
A guarantor, however, does not have access to the apartment and is really just a “guarantee” that the landlord will get their money. Guarantors are responsible for the rent money only after the tenant defaulted on the rental property payments. A guarantor is there to alleviate the financial burden when you fall short.
The guarantor can take you to court for not paying your rent, as well.\
What to do if you can’t find a co-signer
So, you’ve gone through everyone you know and no one can or will co-sign for you. You’re not entirely out of luck yet.
You can still make a case for yourself with the property manager. For instance, try explaining why you have this issue in your credit score and what you’re doing to fix it. If you try this, it’s important to show proof, like recent payment streaks on your credit report.
If that doesn’t work, see if you can negotiate with your landlord. Offer to pay more rent upfront or a larger security deposit.
What about co-signer services?
Be careful before signing anything if you’re considering co-signing companies. The service can act as a co-signer, but adds on a hefty fee to your monthly rent.Some services charge a one-time percentage of your rent, around 10 percent. While others charge a monthly fee that can equal up to 110 percent of rent payment.
Co-signing FAQs
Is it bad to co-sign for an apartment?
The short answer is no – as long as rent payments are made in full every month. For tenants, having a co-signer can help you secure a lease that you might not qualify for on your own. For co-signers, it’s important to understand that while co-signing itself doesn’t negatively impact your credit report, any missed or late payments by the tenant will. As long as the rent is paid on time, there will be no adverse effects on either party’s credit score.
Is it easier to get an apartment with a co-signer?
Absolutely. If the rental property accepts co-signers, it will be much easier for you to move in. Not guaranteed, but definitely much easier. This is particularly applicable for first-time renters (think college students), people on a credit-building journey, people with low credit scores or an eviction that was outside their control.
Are there alternatives to having a co-signer?
Some alternatives include offering a larger security deposit, paying several months’ rent upfront, or providing references from previous landlords or employers.
How to get around needing a co-signer for an apartment?
You can offer a larger security deposit, pay several months’ rent upfront, provide strong references, or look for properties with more lenient rental requirements.
How does co-signing affect your credit?
As the co-signer, co-signing can impact your credit positively or negatively. If the primary tenant pays on time, it can improve your credit. However, if they default, it can negatively affect your credit score.
How to take a co-signer out of your lease?
To remove a co-signer from your lease, you typically need to prove financial stability on your own, such as demonstrating a good credit score, stable income, and positive rental history. You will also need to get the landlord’s approval and possibly sign a new lease agreement.
Do you need a co-signer if you’re legally an adult?
You might need a co-signer if you’re legally an adult, especially if you have no credit history, limited income, or no prior rental history. Landlords often require a co-signer to mitigate the risk associated with younger tenants.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.