When you’re searching for the perfect apartment, the process of securing a lease can sometimes be more challenging than expected. Whether it’s due to a lack of rental history, insufficient income, or credit issues, you might find yourself needing a little extra help. This is where a guarantor comes into play. But what exactly is a guarantor, and how can you find one for your apartment?
Whether you’re looking for rentals in Boston, MA, moving into an apartment in Houston, TX, or in search of a house for rent in Minneapolis, MN, read on to learn how a guarantor can help secure your new home.
What is a guarantor?
A guarantor is someone with good credit who co-signs a lease, agreeing to take responsibility for the rent, fees, and condition of the rental space if the tenant is unable to do so. In essence, the guarantor acts as a safety net, covering any financial obligations like unpaid rent or damages if the tenant defaults. This option is particularly beneficial for renters with lower credit scores or limited rental history, as it provides landlords with added security, making them more likely to accept such a tenant.
Understanding the different types of guarantors
There are different types of guarantors, each tailored to various situations and agreements. Understanding these can help you determine which type of guarantor might be best suited for your needs.
Certifiers
A certifier is a type of guarantor who verifies your financial situation but does not necessarily cover the entire rent. They often provide additional income verification.
You might need a certifier if your income is close to the required amount but not quite enough to satisfy the landlord’s requirements. The certifier can help by vouching for your financial stability.
Limited guarantors
A limited guarantor only guarantees a specific portion of the lease, such as a few months’ rent or a capped financial amount.
This type is useful if your guarantor is willing to cover only part of the lease, perhaps due to financial constraints. You might need a limited guarantor if you have a backup plan for the remaining amount, such as savings, using your credit card to pay rent, or another source of income.
Unlimited guarantors
An unlimited guarantor agrees to cover the entire lease amount, including any potential damages or unpaid rent throughout the lease term.
For example, if you’re a student or someone with no credit history, and you need someone to cover the full scope of the financial obligation, an unlimited guarantor is ideal. This type of guarantor offers the most security to landlords and can make your rental application more competitive.
Guarantors vs. co-signers
A guarantor and a co-signer both take on financial responsibility if the tenant can’t fulfill their lease obligations, but they differ in their roles. A guarantor is generally only responsible for covering rent payments if the tenant defaults, without having any rights to the property. In contrast, a co-signer is more directly involved, sharing equal responsibility for the lease, including rent and potentially other obligations. A co-signer also has rights to the property, similar to the primary tenant.
Reasons why you might need a guarantor
Here are some common reasons why you might need a guarantor:
- First-time renters: First-time tenants, like a college student looking for housing, often need guarantors since they haven’t had an opportunity to build up their credit. If you’re new to the rental market, many landlords require a guarantor to ensure that someone bears the financial responsibility for the lease.
- People with poor credit scores: When you have a low credit score, a property manager is more hesitant to rent to you, since this is a possible indicator that a tenant may not pay on time. Be aware of your credit score before applying, so you know what you’re working with. If you can’t improve your score, consider smaller, independent landlords, as they may be more flexible with credit issues than large rental companies.
- People who have filed for bankruptcy: Bankruptcy reports stay on your credit report for seven to ten years. And, they’re a red flag of financial instability. Even if you currently make sufficient income, if you’ve filed for bankruptcy in the recent past, you might need a guarantor to back you on your lease. The guarantor’s credit history will help to back you up as you rebuild, post-bankruptcy.
- People who faced eviction: If you’ve been evicted from a previous rental, landlords may require a guarantor to cover their risk. Regardless of the reason for the eviction, landlords see it as a warning sign. Therefore, they’re less likely to rent to you, unless a guarantor signs on your behalf.
- People with unstable employment history: If you have a significant employment gap or are a gig worker without stable pay stubs, landlords may be less likely to approve your application. They want to ensure you have a reliable source of income to pay rent on time. In such cases, providing a verification of income letter can help demonstrate your financial stability and improve your chances of approval.
If you fit into any of the above categories, you might want to consider looking for a guarantor to back you on your lease ahead of time. When the property manager broaches the topic, they’ll be impressed that you’re already prepared. Which can only work in your favor.
Who can be a guarantor?
Co-signing or becoming a guarantor is risky when it’s for someone with bad or unreliable credit. It’s best to ask family members or close friends who trust you and know you to act as your guarantor. However, you should ensure your guarantor fits the following qualifications:
- Is a family member or close friend
- Doesn’t share a bank account with you
- Is over 18 years old
- Has good credit history
- Is financially stable
- Is a homeowner (Not mandatory, but it can add credibility)
- Professional guarantor services
Landlords or property managers are more likely to accept applications with guarantors who are close to potential tenants. They know they can easily collect payment from them in case the tenant doesn’t pay.
Alternatives to a guarantor on a lease
It’s not always possible to find a guarantor or co-signer to sign your lease. If you have poor credit or rental history, there are some alternatives you can turn to instead.
Use an apartment guarantor service to ensure monthly rent
An apartment guarantor service can help you qualify for rentals that you aren’t eligible for by yourself. The main difference is that while family members as guarantors typically don’t require payment, guarantor services do have extra fees involved. This is potentially difficult depending on your financial circumstances.
One such service charges 4.75 to 7.5 percent of the annual rent payments for U.S. residents, and several percentage points higher for non-U.S. residents. Crunch the numbers ahead of time to determine if you can afford the extra cost. And, make sure to find out if there’s a fixed monthly rate or a variable monthly rate.
Look for rental assistance
Rental assistance may be available for eligible low-income individuals through community organizations or government programs, such as applying to Section 8 housing assistance.
Additionally, some housing options cater specifically to those with poor credit, offering no credit check apartments. Other alternatives include income-based housing or local non-profit programs that provide rent subsidies to help individuals secure affordable housing. These various forms of assistance can make it easier to find a place to live, even if you face financial challenges or credit issues.
Offer to pay a premium to show financial responsibility
If you’re unable to find a guarantor, make other suggestions to assure the landlord of your financial responsibility. Offer to work some extras into the lease agreement, like a larger security deposit or paying two or more months of rent upfront. This can offset the risk that the landlord takes on when renting to you.
Find a sublet
Sublets are a good option for people with poor rental or credit histories. When subleasing an apartment, you’re contractually obligated to the primary tenant instead of the landlord. However, it’s important to ensure that the sublease you’re entering into is legal since some apartments ban sublets. Avoid legal action by making sure the agreement is on the up and up.
Look for a landlord who’s less focused on the credit report
Many “mom-and-pop” landlords are more lenient with renters than apartment rental companies. Since rental companies have a rental application or 20 to choose from, they’re more selective about the best candidate for each apartment. Meanwhile, you can develop relationships with mom-and-pop owners to build trust. They may even look past a lower credit score, as long as you’re able to make the monthly rent payment.
Guarantor FAQs
What documents are required for a guarantor?
When someone agrees to act as your guarantor, they will need to provide several key documents to prove their financial stability and credibility. These typically include:
- Proof of income: Recent pay stubs, tax returns, or a verification of income letter showing consistent earnings.
- Credit report: A copy of their credit report to demonstrate a good credit history.
- Bank statements: Recent bank statements to show financial stability and the ability to cover rent if necessary.
- Identification: A government-issued ID, such as a driver’s license or passport, to verify their identity.
- Employment verification: A letter from their employer confirming their job position, length of employment, and salary.
How do I find a guarantor for my apartment?
To find a guarantor for your apartment, start by asking family members or close friends with stable income and good credit, as they are often the most willing to help. If you don’t have anyone in your personal network, you can also explore professional guarantor services, which, for a fee, will provide the financial assurance needed to secure your lease.
Can I rent an apartment if I have bad credit?
Yes, it’s possible to rent an apartment with bad credit, but it may be more challenging. To improve your chances, consider providing a guarantor, showing proof of income, offering a larger security deposit, or applying for no credit check apartments. You can also look into rental assistance programs or seek out independent landlords who may be more flexible with credit issues.
What documents should I prepare when applying for an apartment?
To strengthen your rental application, have proof of income (such as pay stubs or a verification of income letter), recent bank statements, references from previous landlords, and your credit report ready. If you have a guarantor, make sure they also have their financial documents prepared.
How can I calculate how much rent I can afford?
A good rule of thumb is to keep your rent at 30 percent of your pre-tax income. You can use a rent calculator to help determine how much you can realistically afford each month, taking into account your income, debts, and other financial obligations.
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.