What Is a Guarantor and Do You Need One?

Article Summary:

Guarantors allow individuals to buy or rent properties and get loans when they otherwise wouldn’t qualify. Guarantors do this by agreeing to meet the financial obligations of renters or borrowers who fail to do so. If you are not financially stable — or just lack the credit history to prove that you are — you may need a guarantor to sign a lease, get a mortgage, or secure a loan.

What is a guarantor? The term itself gives us a clue. Guarantors are a guarantee to lenders and landlords that the latter will get paid and will have contract terms met. A guarantor is financially stable and can help someone who isn’t financially stable secure a loan or lease. If you lack financial stability, you may need a guarantor to sign a lease or to get a home or other type of loan. You may also need a guarantor if you haven’t yet established a credit history proving your financial reliability.

In this article, you will learn more about what a guarantor is, when you might need one, how to qualify as a guarantor, and more.

What is a guarantor?

A guarantor guarantees that the obligations of a lease or loan agreement will be met if the associated renter or borrower fails to meet them. Guarantors assure lenders of money or lessors of property that they will be paid. If you are trying to take out a mortgage for a home, acquire a credit card, or sign a lease for an apartment, having a guarantor can improve your chances of success.

Lenders and landlords typically require the following factors to be in good standing before accepting an applicant:

  • Credit history
  • Income documentation
  • Age
  • Residency

Guarantors can help with all of these factors. When guarantors partner with an applicant, they submit these financial credentials along with the primary applicant. If accepted, they also bear legal responsibility for the terms of the lease or loan agreement.

Guarantors give lenders and landlords assurance and peace of mind that they are protected by a financially stable third party.

What does a guarantor do?

A guarantor agrees to assume legal and financial responsibility for a loan or lease agreement should the primary borrower fail to do so. Guarantors also pledge their assets as collateral. They exist in both buying and renting scenarios.

Guarantors increase the chances of an applicant getting accepted for a loan or lease. In some cases, lenders or landlords may even require a guarantor.

As a guarantor, you will have to read the terms of the lease and make sure that you feel comfortable and capable of upholding the terms should the primary borrower fail to do so. You will have to present your financial credentials and personal information, answer a few questions, and sign the agreement. As part of the application process, the potential lender, landlord, or property manager may run a credit report.

If the primary borrower or tenant fails to uphold an obligation, you as the guarantor will have to take responsibility for making sure the payments are made and terms are upheld.

Types of guarantors

There are several contexts in which a guarantor can intervene, as well as different guarantor responsibilities within these contexts. The primary distinction to keep in mind is between limited and unlimited guarantors, though there is also a special type of guarantor called a certifier.

Limited guarantors

Limited guarantors may be legally responsible for only a percentage of the loan agreement, with the rest of the percentage being entirely the responsibility of the borrower. A limited guarantor may also be involved in the agreement only for a set amount of time, after which point the borrower takes complete responsibility.

With a limited guarantor agreement, certain conditions must be met before the lender can access the guarantor. Another term for a limited guarantor is conditional guarantor.

Unlimited guarantors

Unlimited guarantors share the responsibility of the entire amount of a loan or lease for the entire duration of the agreement. In other words, the responsibility is the same for both the borrower and the guarantor. Another term for an unlimited guarantor is unconditional guarantor.


Guarantors don’t only exist in loan or lease situations. A guarantor can take the role of a certifier in some cases. This means guarantors can back applicants for jobs or passports. Duties of a certifier include pledging assets as collateral, verifying the identity and character of an applicant, and providing other identifying documentation. Though the first of these is a loan situation, the last two may or may not involve loans or leases.

In summary: types of guarantors, limited vs. unlimited vs. certifier
TypeAlso calledSpecifics
LimitedConditionalPercentage of obligation, duration of responsibility, and conditions requiring action may all be limited.
UnlimitedUnconditionalIf the primary buyer, borrower, or lessee fails to meet obligations, this guarantor takes on full responsibility throughout the duration of the agreement.
CertifierN/AThis guarantor certifies the identity or character of an applicant for anything, from a loan to a job or passport, and may provide collateral for a loan.


Guarantor vs. cosigner

Guarantors and cosigners are similar to one another, but they are not the same. Cosigners share in both the ownership and responsibility of an asset or agreement. Guarantors, in contrast, have no claim to assets with which they are involved. If you want to get a cosigner for a personal loan, read this article by SuperMoney.

Cosigners have more responsibility than guarantors. They are responsible for payments and terms starting when agreements are signed. On the other hand, guarantors are only responsible if primary parties fail to meet their obligations. Read this article to learn more about cosigning a credit card.

When do you need a guarantor?

Guarantors are most often useful when entering into lease agreements and loan agreements. Several factors determine the need for a guarantor.

How to know whether you need a guarantor

If any of the following situations applies to you, getting a guarantor is a good way to increase your chances of acceptance for a loan or lease.

  1. Non-United States residency: If you want to get a loan or lease and you are not a U.S. citizen or legal resident, working with a guarantor may be the only way for you to succeed.
  2. Inconsistent employment history: If you have a history of gaps in employment, lenders and landlords may see this as a risk. A guarantor with stable employment can provide the extra assurances that can get you accepted for the loan or lease.
  3. Insufficient income: If you aren’t making enough money to meet an income requirement, you may need a guarantor. Annual income requirements may vary, so check with your potential lender or landlord. A guarantor with sufficient income is a good solution.
  4. Bad credit history: If you have a low credit score, bad credit history, or limited credit history, you may need a guarantor with a good credit history to back you up. A guarantor’s credit history supplements an applicant’s. Be prepared for a credit report to be run on both you, the borrower, and on your guarantor. Credit card companies want to see that at least one of you has a history of paying back debts on time.
  5. Bad rental history: If you don’t have a history of monthly rent payments, or if you have a history of missing monthly rent payments, it will be harder for you to get accepted on a new lease. In this case, a landlord or property manager may require a guarantor. Read this article to learn more about what it takes to get approved for an apartment.

How to find guarantors

Guarantors can be people you know. Asking a parent, an immediate family member, other relatives, or a friend with a good credit score and a stable job is a good place to start.

Financially fit family members with great credit scores tend to make the best guarantors. Keep in mind that your guarantor should be at least 21 years old.

If you don’t know or trust anyone who could act as your guarantor, you can use a guarantor service. Guarantor services can help you secure a lease or loan, but for a hefty fee. Typically, guarantor services charge 4%–10% of your rent or loan amount. If you choose to go with a guarantor service, research a few to make sure you get the best one for you.

Pro tip — Find a guarantor with a high credit score who is also a homeowner. Homeownership is a good sign of financial stability. This is a bonus that will give your guarantor even more credibility.

How to qualify as a guarantor

If you are considering serving as a guarantor yourself, how can you qualify? If you need a guarantor, how can you determine if people you’re considering can qualify for that role? What requirements do they need to fulfill?

To qualify, a potential guarantor must meet the same requirements as the primary borrower or renter. There are no extra requirements that apply to a guarantor that don’t apply to the primary party.

A guarantor should have a good credit report, be at least older than 21, have a stable and sufficient income, and be a U.S. citizen. Ask lenders or landlords you are considering for further information to learn their specific requirements.

Pros and cons of guarantors

While there are significant advantages to the borrowers and renters helped by guarantors, the disadvantages to the guarantors themselves should not be ignored. Guarantors should know the risk they take on when partnering with someone.


Here is a list of the benefits and the drawbacks to consider.

Advantages of guarantors
  • A guarantor allows someone with a low credit score or insufficient financial history to rent a home or get a loan.
  • Guarantors allow borrowers to get loans for more than they could qualify for alone.
  • Guarantors can help borrowers improve their credit scores.
Disadvantages of guarantors
  • Guarantors put their credit scores at risk. If the primary party defaults, a guarantor’s credit may be adversely affected. Furthermore, lenders often run a credit report on guarantors, which may affect their credit score.
  • A guarantor may be liable for taking on the financial obligation if the primary party cannot. This, after all, is the purpose of a guarantor, though the responsibilities of limited guarantors may be only partial and temporary.

Key takeaways

  • If you have a low credit score or spotty income history, you may need a guarantor. Guarantors share the responsibility of a loan or lease agreement and improve the chances of someone getting accepted for a loan or lease. You typically enlist the help of a guarantor when applying for a home rental or a loan. A guarantor lowers the risk to a lender or landlord.
  • A guarantor can be a friend or family member with a good credit score and strong financial credentials. You can also use third-party guarantor services for a fee.
  • Guarantors are advantageous for potential borrowers because they open up more opportunities for them. However, guarantors should be aware of the responsibility they take on should primary borrowers fail to uphold their obligations.
  • A guarantor is not a cosigner. Cosigners usually have more responsibility than guarantors and have ownership rights that guarantors do not.
  • There are limited and unlimited guarantors with different degrees of responsibility under an agreement.


Who qualifies as a guarantor?

Anyone who meets the requirements set in place by a lender or landlord qualifies as a guarantor. Typically, these requirements include having a good credit score, stable income, and U.S. citizenship.

What does it mean if you are a guarantor?

If you are a guarantor, you are the lender or landlord’s backup plan should the primary borrower fail to make payments or comply with agreement terms.

Is a guarantor a cosigner?

A guarantor is not a cosigner. A guarantor is similar to a cosigner in that both share responsibility with a borrower or renter who doesn’t meet requirements. However, cosigners have more responsibility and ownership over assets than guarantors.

What is example of guarantor?

You just graduated from college, and you are moving to a new town. You don’t have any rental history, and you haven’t started your new job yet. Your father can be a guarantor on your first lease. He will provide the financial credibility necessary to get accepted to the lease, and will sign the agreement stating that he bears responsibility should you fail to make rent payments.

View Article Sources
  1. Auto Loans > If I need to have a co-signer, can a lender or broker require that it be my spouse? — Consumer Financial Protection Bureau
  2. CFPB Argues that Guarantor is Credit Applicant in Supreme Court Amicus Brief — Troutman Pepper law firm
  3. General background articles from Experian and from investment, fintech, and personal finance sites — Various
  4. Mortgages > If I need to have a co-signer, can a lender or broker require that it be my spouse? — Consumer Financial Protection Bureau
  5. What Is a Guarantor? A Godsend If You Can’t Pay Rent — National Association of Realtors
  6. When do I need someone to guarantee or co-sign, or be a joint applicant on my credit card account? — Consumer Financial Protection Bureau
  7. Best Personal Loans with a Cosigner — SuperMoney
  8. How to Get Approved for an Apartment — SuperMoney
  9. Should You Cosign a Credit Card For Friends or a Family Member? — SuperMoney