Who can be a Guarantor and what is the role?
When someone you know is in need of a loan, but their credit score is bad, there is a way you can help them out. They may have asked you to become a guarantor for their TFS loan. What does this mean for you? Well, it means you’re helping them borrow money when other banks and lenders will not have approved them – due to their poor credit. There’s a few things you should know about becoming a guarantor for someone. You’ll find out what you’ll need to be a guarantor as well as what the role entails for you.
If you have been asked by someone you know to be a Guarantor on their Guarantor loan you may be asking yourself what this entails and whether you fulfil the criteria. At TFS Loans we have created a helpful infographic to guide you through our criteria for Guarantors.
Essentially anyone can be a Guarantor on a TFS Guarantor Loan as long as they fit four simple criteria:
- The Guarantor must be a UK Homeowner – by Homeowner we don’t mean you have to own your home outright, it can be mortgaged. The TFS loan isn’t secured against your home, but we ask our Guarantors to be Homeowners as part of our criteria for acceptance.
- The Guarantor should have a good credit history. We will run a credit check on you, with your permission, as part of the application process. If you aren’t sure about your credit score you can always use one of the many free credit checkers to see your score before you agree to be a Guarantor.
- As the Guarantor you should be able, and happy, to make repayments on the loan if the Borrower cannot. At TFS Loans we work in partnership with the Borrower and the Guarantor, if the Borrower does get into difficulty with payments. It is always our last resort to come to the Guarantor and ask for a monthly repayment or a given amount to be covered, but the Guarantor should be aware of this risk upfront and have the means to pay the loan if the Borrower can’t. Failure to pay could affect the Guarantor’s credit score and access to borrowing in the future.
- The Guarantor must be aged between 18 and 78 at the start and end of the loan term.
Being someone’s Guarantor effectively means you are guaranteeing that the loan will be repaid. If it cannot be paid by the Borrower, as Guarantor, you will be expected to pay it. This means that the decision to become a guarantor shouldn’t be taken lightly. At the end of the day, your credit score and more could be on the line if the borrower is unable to repay the loan. That’s why it’s essential to only become a guarantor for someone you truly trust to make repayments on the loan.
Whilst the loan will be taken out in the borrower’s name, it can still affect your credit score in the short term and, in cases where the borrower doesn’t pay, in the long term too. That’s why most guarantors are a friend or family member, boss and in some cases a landlord. If you need any information on becoming a guarantor, and the responsibilities you’d be undertaking, please use our Guarantor FAQ section or give us a call on 0203 476 4170. To find out how the application process works, visit our Guarantor Hub page.