Do you need to take out a loan, but must get a guarantor in order to secure it? If you aren’t already aware, a guarantor is somebody who is willing to officially take care of your debt (e.g a mortgage) if you can’t pay it; so naturally finding people who are willing to do this can be difficult. People who have a poor credit history might need to find a guarantor in order to rent, get a loan, or sign a contract because it guarantees payment for the company if anything should go awry. Basically, they don’t care how they get paid, as long as they get paid! In general, the majority of guarantors must be an adult who owns their own home with a good credit history. If you’re struggling to find a guarantor or worried that you’ll never be able to find one, this post can help you to do it. You need to remember to be polite and prepared when speaking to anybody who may be willing to support you in this way. Read on to learn more about finding a guarantor for your loan:
Print Out Financial Statements
Print out your financial statements ready to show to the bank and any potential guarantors. Include any balance sheets for bank accounts and credit accounts, as well as your regular pay slips. This will prove how much money you earn, what your cash flow looks like, and whether you’re always in or out of pocket. Your financial statements are a good indicator of how well you manage your finances, without taking a closer look at your credit report (although this needs to be looked at too).
Print Out Your Credit Report
Now you need to print out a copy of your credit report before applying for any guarantor loans. This will give you a good idea of what any bank or guarantor will see. You can use one of the 3 major credit reporting agencies; Experian, TransUnion, Equifax. You can receive one free credit report from each agency per year, but after that you must pay for additional credit checks. Don’t make a habit of this though, as it can affect your report and leave you at a disadvantage! If you have numerous agencies doing this for you too, it can make it look as if there’s too much activity going on, and result in a lower credit score. Always be mindful and careful of how often you do this!
Make a List of Potential Guarantors
Write a list of any potential guarantors that you have in mind. These people should all be aged 18 -70, who probably have a good credit history. You’ll find that the majority of guarantors are family members, such as parents, grandparents, siblings, uncles, and cousins. Also list your close friends, as they’ll need to feel comfortable enough to pay the loan if you can’t. Make sure you’d feel comfortable discussing finances with them in great detail.
Prioritise People on the List
Prioritise people on your list starting with those who will be more likely to agree. You’ll need to ask them in this order, so you don’t ask people for help when you don’t actually need it anymore. Don’t simply ask them all at once!
Arrange Meetings with Your Potential Guarantors
Arrange different meetings with any potential guarantors, and bring your contract, financial statements, and your plan to meet all of the required payments. Perhaps a cafe or restaurant would be a good setting for this, so you can have a serious chat about what you’re going to do. Make sure they know what they’d be getting themselves into if they agreed, but also make sure you tell them everything you’re going to do in order for them not to need to give you any financial support. They need to be confident that although they will help you if they absolutely must, that the situation will never arise. To get them on board, agree to take advice from them on how to make your financial situation more effective if they want to give it to you. You might find it helpful to set up an account with an automatic transfer that makes sure your payments are made monthly and on time. Try to be as accommodating and helpful as you can in reducing the risk of missing any payments for both of you.
Do your best not to seem offended if one of your potential guarantors say no to you. They may have taken risks similar to this in the past that proved to be a mistake. They may also already have a negative credit report that you don’t know about!
The person you ask may need time to think about becoming a guarantor. Allow them to take a few days to read the contract you give them and have a few days – one whole month to consider your proposal. Don’t force an answer out of them straight away.
Move Down the List
Move down your guarantor list if people turn you down. If you’ve followed the advice in this post, take the same approach with them as you did with the last guarantor; just because it didn’t work then, doesn’t mean it won’t work now. If you go through your list without finding a guarantor, then you might need to wait until you have a positive credit history.
Sign the Contract
If you’ve managed to find a guarantor, you’ll need to sign a contract with them. Allow them to ask questions, so they feel ok with making this decision. Promise that you’ll check in with them regularly, even if it’s just once every few months, and report back to them with any new information.
Ask for Contract Options from Banks, Credit Card Companies, and Landlords
If you can’t find a guarantor, then you might want to look at other options available to you. Request contract options from banks/credit card companies/landlords.
I hope this post helps you to find a guarantor for your loan – thanks for reading!