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Borrowing with a guarantor

Could borrowing with a guarantor improve your chances of approval? Find out more about borrowing with a guarantor and how it affects your application and borrowing.

If you’re struggling to get approved for a loan due to a poor credit history, applying with a guarantor can help improve your chances of being accepted.

Lenders will take your application more positively if someone else is there to help shoulder your financial responsibility.

A guarantor should be someone you trust, with a good credit score and a secure financial situation of their own.

Find out what a guarantor is and how a guarantor loan could work for you with our guide.

What is a guarantor?

A guarantor is someone you trust, usually a relative, friend or partner, who agrees to take on responsibility for repayments on your loan should you become unable to do so. Applying for a guarantor loan can help those with poor or no credit history get the help they need because they offer the lender an extra layer of security.

Who can be a guarantor?

You can nominate anyone as your guarantor, as long as they are over the age of 21 and have a stable financial history. Usually, it’s a family member or friend who is willing to make the repayments if you cannot.

Your guarantor can also be your partner, as long as you are not tied together financially in other ways, like having a joint account, loan or mortgage. It helps if you’re the only person they’re currently agreeing to be a guarantor for.

If you’re to be the guarantor, you should be sure that the borrower can afford repayments and has a good reason for borrowing the money.

How much does a guarantor need to earn?

A guarantor’s gross income doesn’t necessarily contribute to a loan approval. What’s more important is that they demonstrate financial stability with a good credit history, and must be able to cover loan repayments if needed. Your loan application is more likely to be accepted if your guarantor owns their own home.

Although a guarantor loan offers peace of mind to the lender, it’s still a condition of the loan that the borrower can afford the repayments themselves, barring a change in circumstances that needs the guarantor to take on repayments. Some lenders choose to pay the loan into the guarantor’s bank account, rather than the borrower’s, so trust between all parties is essential.

How do guarantor loans work?

Guarantor loans work similarly to a standard unsecured loan. They are often used for a variety of means, from consolidating debt to meeting unexpected expenses.

Although a lender will ensure the borrower can meet the repayments before accepting the loan, you need to be aware of the risks should your finances change. A guarantor becomes liable for repayments the borrower is unable to meet. Therefore, before choosing a guarantor, you should consider the following:

With these things in mind, finding a guarantor should not be taken lightly. It’s worth considering whether you can rely on them financially or if their own finances will be at risk if your situation changes.


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