If you're looking for a rental but have low credit or no leasing history, you may have trouble getting a place on your own. Landlords place a lot of weight on certain aspects of your application, such as credit profile or income, and they perform comprehensive reviews, taking all facets of your finances into consideration. A landlord can require marginal applicants to find a co-signer, or guarantor, because they don't meet all leasing criteria. A guarantor offsets the landlord's risk of eviction, because she must make the rent payments if you don't.
Know Before You Go
Determine whether landlords are likely to require you to get a guarantor before you look for a rental. Avoid rentals that don't allow guarantors and focus your search on properties that are more flexible and accepting of applicants with bad credit and other obstacles to leasing. Ask the landlord or property management company about their guarantor policy before viewing or applying for a lease property.
Guarantors Take a Risk
Guarantors have much to lose and little to gain by co-signing on a lease. Poor credit usually indicates financial mismanagement and failure to pay bills. Also, a short-lived rental past or no leasing history at all indicates you're new to renting long-term and dealing with housing payments. Guarantors take a chance by signing a lease for you, risking their own credit and promising to pay your rent if you can't.
Guarantors Are Usually Higher Earners
Close friends and family are a common source of guarantors. However, a lease guarantee can place a lot of pressure on a relationship and create personal problems if the guarantor is forced to step up with the rent on your behalf. A guarantor may have to earn significantly more than the rent to act as a co-signer on your lease, although exact income requirements vary by location. Guarantors must also be willing to divulge sensitive financial information for landlords to review.
Institutional Guarantors Charge a Fee
Institutional guarantors, or co-signing services, can also guarantee your lease if you can't find an individual to do it. Likely candidates for a guarantee service include creditworthy students, retirees, foreigners residing in the U.S. and other tenants who can afford to rent but still have trouble leasing. The companies can guarantee a one-year lease and charge fees. For example, one service charges a refundable up-front fee, plus 10 percent of the monthly rental rate and up to six months of prepaid rent for the highest risk tenants.