Are you on the hunt for a rental property but lack a strong credit history or reliable income? Or you may be a first-time renter with no experience managing rent payments and lack glowing references from past landlords. If so, you could face obstacles in getting approved for a lease.
However, with a lease guarantor on your side, landlords who would otherwise reject your application may give you the green light. In this guide, we’ll explain the role of a lease guarantor and how adding them to your lease can improve your chances of getting the keys to a rental.
What it means to be a lease guarantor
When would a guarantor be needed on a lease?
Why would a landlord ask you, as the tenant, to find someone to be your guarantor? The reason is that you fail to meet one or more crucial requirements as part of the screening process, which increases the landlord’s risk of unpaid rent. For landlords, lost rent payments are the primary concern when they invite a tenant to live in their rental—and bringing a guarantor on board is one way they can offset that risk.
Here are some situations where you may need to enlist the help of a guarantor to secure a lease:
- Lack of established credit or a poor credit score. Landlords prefer renting to tenants who are capable of paying rent on time, so having a healthy credit score and a positive credit history are key to getting your application approved.
- Minimal work experience or gaps in employment history. If you have a sparse employment history or frequently switch jobs, landlords may be concerned about you having enough income to rent on time.
- No rental history. Having no experience renting a property may prevent you from securing a lease, as a landlord won’t have any way to assess how you’ll behave once you become their tenant.
- Negative past landlord or employment references. Have a rental history riddled with scathing references from past landlords or employers? If so, adding a guarantor to your lease agreement may convince landlords to take a chance on you.
- Insufficient income. An inadequate or erratic income is a huge red flag for landlords, as the last thing they want is a tenant who’s constantly on the brink of default. If your rent-to-income ratio is too high, you can expect landlords to request a guarantor.
Who can be a guarantor on a lease?
So, what qualities must a person have to act as a guarantor? In short, they must be able to fill the gaps in your lease application. Here are some criteria you’re likely to find on a landlord’s wish list:
Strong credit history. A high credit score signals to landlords that the individual can comfortably manage debts, including making on-time payments. Ensure that anyone you invite to be your guardian has a credit score between 650 to 750 (the higher the better, of course).
Stable income. A steady income ensures the guarantor has enough money to cover missed rent payments. As a rule of thumb, look for someone who earns 80 to 100 times your monthly rent, which should be high enough to appease most landlords.
Verifiable employment. As with regular tenants, landlords expect guarantors to prove their income. The guarantor should be comfortable submitting documents and information such as their pay stubs, tax returns, and bank statements.
Residency status. Communicating, rent collection, and dispute resolution can be tricky if the guarantor lives in another country, so many landlords demand that they live in the same jurisdiction as the rental unit and tenant. Documents that can serve as proof of residency include a passport, birth certificate, driver’s license, academic records, and property tax bills.
Clean legal record. A guarantor with a criminal record or other negative background details could risk landlords’ ability to collect unpaid rent when needed.
Age and legal capacity. The individual should be of legal age in the province or state where they live and allowed to enter lease agreements freely. Understand the rules in your jurisdiction to ensure they can lawfully act as your guarantor.
Willingness to sign a legally binding agreement. The guarantor must be prepared to sign the lease agreement, promising to cover any late rent or other fees required under the terms. They must agree to carry out their financial obligations as necessary and understand that they face legal repercussions if they cannot or refuse to do so.
What’s the difference between a co-signer and a guarantor
When you co-sign a lease with someone, you share equal responsibility with them for the rent. If you miss your portion of the rent, the landlord can legally ask your co-signer to cover the shortfall and vice versa. The co-signer also has the right to live on the property as a tenant.
On the flip side, the guarantor only applies their signature on the lease as the financial backer instead of a tenant. That means they cannot live in the property with you. In addition, they assume legal liability for the rent payments only when you default. In other words, your landlord cannot ask the guarantor for payment when you have the financial means to cover it personally.
How to find a lease guarantor
Think you might need a guarantor to secure approval for your dream rental unit? Here’s who you can turn to:
Family members. A family member, whether a parent, sibling, or relative, is the most common choice for a guarantor, as they’re more likely to be willing to support you. Ensure you and the individual acting as your guarantor know what the arrangement entails regarding obligations and risks. For example, if your family member doesn’t follow should you default, they may face legal action by the landlord. Their credit scores will suffer as well.
Close friends. Friends with whom you’ve known for a long time and have a stable relationship are good options for a guarantor. As with family, ensure the two of you fully understand the agreement, including the risks involved. For example, if you fail to pay your rent, you risk causing financial hardship for them, potentially souring the relationship.
Lease guarantee companies. Suppose your inner social circle and family aren’t an option. In that case, you can seek help from companies that offer guarantor services to renters. For a monthly fee, these third-party guarantors will cover your rent for a predetermined period if you default. To qualify, you must demonstrate that you earn sufficient income or at least a cushy savings account.
Our final thoughts
Landlords have many requirements they look for in a tenant, such as a stable job, sufficient income, and high credit score. However, you may not satisfy all of them, which can make your quest in finding a rental challenging and overwhelming. A guarantor can help fill these gaps by covering or “guaranteeing” your rent payments should you default. Since non-payment of rent is the most dreaded scenario for landlords, you’re more likely to get approved for a lease by offering this extra financial security.
But finding a guarantor isn’t a viable option for every renter. If that’s the case for you, a third-party rent guarantor can serve the role, giving you the financial backing you need to get noticed by landlords. Learn how SingleKey’s Tenant Guarantor can help make your rental application stand and get you approved for a lease fast.
