For many who find themselves in a financial pickle, unable to obtain a loan, a guarantor may be the answer. Receiving approval for a loan in the US is dependent on many factors. You must provide proof of a stable income, a fair credit history and provide proof of residence. For those who may have no credit or poor credit, not currently employed or may not earn within a specific wage bracket to qualify for a loan, an alternative to accessing a loan is with the assistance of a guarantor.
A guarantor is someone who can provide the financial support you need when applying for a loan. If you need a guarantor to back your loan application, discover just how you can find the right guarantor and hat it means for your financial interests.
- What is the Guarantor Loan?
- Who Can Be a Guarantor?
- Qualifying Criteria for a Guarantor
- Does Being a Guarantor Affect My Credit?
- How Much Money Do You Need to be a Guarantor?
- Why Does the Guarantor Receive the Loan Sum?
- Where and How is a Credit History Check Performed in the US?
- Can I Get Approved for a Loan with Bad Credit?
- How to Get a Loan From Your First Bank Account
- Receiving Finances for Your Personal Needs
What is the Guarantor Loan?
The guarantor loan is the finance that is backed by a family member, a friend or colleague who signs as surety for the provision of the loan on your behalf. Acting as a guarantor does not come without responsibility. If you as the loan applicant cannot fulfil your financial duties, the debts will fall on the guarantor to settle. Before seeking a guarantor, it is important to ensure you can afford the loan repayment. All terms of the loan must be discussed with the person willing to sign as a guarantor to ensure they are clear of the financial implications.
Who Can Be a Guarantor?
Anyone with a better credit history and a regular income can act as a guarantor on your behalf. This relationship must include transparency for the person acting as a guarantor to ensure they are aware of the penalties should you default on the repayment of the loan.
Guarantor loans with fair interest rates are offered to guarantors ho are homeowners. Renters or tenants can also act as guarantors but may receive less favourable rates.
In the application for a guarantor loan, the financial situation of the guarantor is examined. This means that the selection of your guarantor must be carefully considered. All parties involved must be aware of the terms when signing for these types of loans.
Qualifying Criteria for a Guarantor
- Good Credit
- Stable Income
- US resident
- Possesses an Active US Bank Account
- Is Over 21 Years
- Can Afford to Settle the Loan Should the Borrower Default on Payments
- Is Accepting of the Regulations Surrounding the Issue of the Guarantor Loan
Does Being a Guarantor Affect My Credit?
The guarantor loan will not affect your credit score provided that the repayment on the issued loan is settled on time each month. The only time being a guarantor may affect credit is if the borrower defaults on their loan repayments and you as the guarantor fail to settle the outstanding debt. This will negatively impact your credit rating.
Acting as a guarantor will be recorded on your credit file, but it will not impact your credit history unless late payments are made. It is important to understand, as a guarantor, your borrower must be equipped financially to pay off their loan to avoid the occurrence of negative credit.
How Much Money Do You Need to be a Guarantor?
For rental applications, the guarantor ill need to earn at least 3 times the rental sum per month to qualify. For a general loan, a guarantor should simply provide proof of credit history and salary. Where a positive credit is determined and the guarantor can afford the loan that is applied for, it will be issued into the designated US bank account of the guarantor.
Why Does the Guarantor Receive the Loan Sum?
The purpose of depositing the borrowed money into the account of the guarantor is to protect against the possibility of fraudulent activity.
A guarantor can also provide approval for more than one loan provided they are financially equipped to afford the costs of both loans. It is important to ensure the loan sum including the additional interest rates can be afforded on the repayment of the loan.
Where and How is a Credit History Check Performed in the US?
When you apply for a loan in the US, a standard credit check must be performed for loan approval. The credit evaluation is performed by the lender you are applying to for the loan. They will access your financial history or records and determine whether your credit ratings are positive. Personal loans, mortgages and other types of financial solutions are only issued once the credit check is completed by the lender and the applicant deemed financially secure to afford the loan, its interest and repayments.
All lenders offering financial products from a loan to a mobile contract will have access to the credit records of an applicant. With the applicant’s permission they can perform an affordability check. The process of a credit check and loan approval is also dependent on the lender criteria.
Can I Get Approved for a Loan with Bad Credit?
Yes, payday loan providers will request proof of income to ensure you can afford to make the weekly repayments or settle the debt at the end of the month. It is important to look for a bad credit provider. Only with a bad credit solution tailored to meet your requirements, can you receive the designated loan sum when you comply with the lender’s criteria.
Credit checks are performed online and run through specialized software generating the relevant credit scores and related information.
How to Get a Loan From Your First Bank Account
If you are opening a bank account for the first time in the US, you can apply for a personal loan. Provided you can afford to pay the loan on time.
Receiving Finances for Your Personal Needs
When you need a loan, it is important to examine your finances along with the qualifying loan type. Your lender will perform a complete credit assessment to advise on qualifying criteria. When you need