Why its important to have a guarantor with a good credit score
One of the first checks carried out by guarantor lenders is to find the credit score of you and your guarantor. For lenders it is ideal for borrowers to have a guarantor with a good credit score or at least someone who is a homeowner because they would have to have demonstrated a good credit score in order to get a mortgage.
A guarantor with a good credit score:
- is more likely to repay the loan if the borrower cannot
- is likely to be more trustworthy and organised with their finances
- is less likely to leave town if they have assets such as a car or home
With these factors in mind, the guarantor lender is therefore more likely to approve a guarantor loan if you have a guarantor with a good credit score – so this is essential! It is simply less risk for the lender who feels more confident that they will be able to recover funds if the main borrower defaults.
How you get a good credit score
You or your guarantor can get a good credit score by having a history of paying loans and credit cards on time. As soon as you miss repayments for your loans, your credit score can fall.
Young people will tend to have a high credit score because they have little history but some lenders will also see this as a deterrent because they have no indication as to whether they are a good borrowing proposition or not. So actually, the longer you have had credit for and kept up with payments, the better your score will be.
There are some easy ways to boost your credit score though such as joining the electoral roll – by confirming your name and address with the local authorities, it is a trust signal to whichever lender you apply with that you are a real person living at a real address.
Not included in your credit score are your mobile phone bills, gas and electricity bills, prepaid cards and your rent. So if you have fallen behind on these, it won’t affect your score.
To maintain a good credit score, other than keeping up with payments, you should avoid bankruptcy and making lots of enquiries for different loans in a short space of time as this can make your seem financially desperate and this is a turn-off for lenders.
Good guarantors to have: parents, siblings and friends
The best types of people to have as your guarantor are typically those close to you who you can discuss your finances with e.g parents, spouses, siblings and friends.
Now ideally you want to have one of these people close to you and also have a good credit score.
If your parents are homeowners and not in debt, they would make great guarantors to have and this will hopefully boost your chances of being accepted for a guarantor loan.
If you repay on time, it helps improve your own credit score
One of the best things about guarantor loans is that you are accepted and can make your payments regularly on time, the information will be sent back to credit reference agencies and this will improve your credit score. So hopefully this will open doors to more credit facilities and better rates.
Guarantors loans can really help those with bad credit to get the opportunity they need to rebuild their credit.
Types of loans we offer
At guarantor loan comparison, we specialise in guarantor loans in the UK. We allow you to compare the rates and terms of over a dozen lenders so that you can find the right one for you.
When we set up in 2014, we noticed that there were not enough guarantor comparison sites available in the country. Above all, the lenders tend to have different terms that customers need to know about such as the loan duration and whether you must have a guarantor who is a homeowner or a tenant. So being able to see all the terms in one place can make the application process a lot simpler.
As mentioned above, it can negatively impact your credit score if you apply for too many loans with too many companies in a short space of time – as it looks like you are financially stretched. So ideally, we want prospective borrowers to see all the potential loans on offer, find the best one for them and choose the most appropriate lender accordingly.