Becoming a guarantor? consider reading these points before doing it


The biggest reason why many people opt for a personal loan over other financing alternatives is that they are unsecured. You don’t need to pledge your precious asset as collateral security.

However, many financial institutions, including banks, ask people to introduce a guarantor to provide approval. Due to this factor, applicants who cannot arrange a cosigner often opt for loans in the UK with no credit check & no guarantor.

Many of us strongly believe in supporting a family or friend dealing with an emergency that can be solved only with money. If you have saved funds, you offer them upfront, but if you don’t and want to offer, then you might become a cosigner for a smooth loaning process as a helping gesture.

If you are helping your friend or family member to take out a loan by becoming a guarantor, you have to consider some factors before moving forward on this path. Being a guarantor in a loan has its own set of likely consequences, and this is because you agree to pay someone else’s financial obligation if he/she fails to do it.

If you already know this fact, then there are a few more things that you should understand before signing up for it.

Who needs a guarantor in a loan, and in what case do lenders ask for it?

A person needs a loan but has a low credit score or unimpressive financial history. Unless they opt for loans in the UK with no credit check and no guarantor, they might require a cosigner to take out credit smoothly.

If you decide to become a guarantor, you are equally obligated to pay off the borrowed money when the main borrower cannot do it. 

For instance, the main applicant may take out a £500 loan with a guarantor’s help and lose his/her job. The inability to earn a stable income will make him/her unable to keep up with the loan repayments.

In this case, a cosigner or a guarantor is fully liable to make this repayment as they had agreed to do it when the loan was offered.

Becoming a guarantor needs:

  • A stable source of income.
  • Have a good credit score.
  • Citizen of UK.
  • Know the terms & conditions of the loan.

Many lenders ask for a guarantor in a loan when perceiving that the entire loaning process is quite risky. To make sure that their lent money is secured and repaid on time, they ask the borrower to add a guarantor to get approval on their loan request.

Other factors that lead a lender to ask for a guarantor are:

· Credit health

One of the main criteria to get easy approval on loan is the level of credit score of the applicant. If the credit health of the borrower is not good or ratings have gone wrong, then banks or other financial institutions ask them to bring in a cosigner with a good credit score that matches the term requirement.

· Oodles of debt

If the main applicant has a lot of debt, then it makes him/her a risky borrower. Here a lender is at high risk of lending the requested money to the person as he possesses a questionable financial background. As a result, a lender asks to include a guarantor in the loan.

· Employment stability

Another major requisite to get a loan on favourable terms is having a steady income. Some people also face instability in employment as they keep moving from one region to another. If an applicant has an unsteady job, banks will ask them to bring a cosigner with a stable job. 

Not having stability in a job can raise a concern in the whole loan process because it brings an applicant into a doubtful spot of not paying the borrowed money. 

· Lending rule

Having a guarantor in a loan can be a part of some lending institutions’ regulations and rules they follow. Every lender follows a different set of loan terms. However, not every person can easily become a guarantor in a loan. There are some norms that lender specifies that a guarantor should meet.

What are the pros and cons of becoming a guarantor?

When you decide to become a guarantor, you should understand all the pros and cons that are linked with becoming one. 


· Emotional satisfaction

It gives a sense of satisfaction when you help your family and close friends when they need you the most. You should assess the associated risk with the loan agreement to know whether the main borrower has a decent repaying history in place.

· Highly flexible

When you become a guarantor, you are free to choose the limit of the amount of guarantee to reduce the risk. When the principal borrower fails to make repayments, you are liable to pay only the portion of the money you guaranteed while signing the loan agreement.


Legal obligation

When you enter a loan agreement, this means you are signing a legal contract for a specific duration of your life. When you sign this legal agreement, you agree to bear all the likely repercussions on behalf of the main applicant.

If the principal borrower fails to repay the borrowed money, then you are obligated to pay it. Furthermore, if you also default on the loan, you will invite some major legal troubles in your life.

· Credit score

We are all aware of credit ratings’ significance in the lending industry. Maintaining a good credit rating is very important to get loans to purchase a house, car, or for other financial emergencies. If you have worked hard to uplift your credit ratings these years, then you will not like it when it goes down because of someone else’s debt mistake.

If the main borrower keeps making the repayment, it will not affect your credit score. But if he/she fails to do it within the loan tenure, then both of the borrower’s credit ratings get damaged.

· Soar relationship 

Being a guarantor is stressful as it can impact your relationship with the principal borrower. Carrying a financial obligation of someone else debt can ruin your relationship. In other cases, if the borrower fails to repay the loan, the inability to get out of the financial burden can soar your bond more.


Knowing the requisites of becoming a guarantor is as important as understanding the repercussions if you don’t pay the borrowed money back. If you fail to repay the loan the way the main applicant does. Then you might see the following series of events:

  • Get a legal notice from the lender to clear the loan.
  • You will be treated as a willful defaulter.
  • Your credit score will get plummeted.
  • Getting a loan in the future becomes highly uncertain.

The decision to become a cosigner is solely yours. But it is imperative to be aware of all things that are involved in the agreement. If you see that there is no less risk involved, then you can move ahead to offer your helping hand but if you see any red flags, then reconsider your decision. 

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