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Sometimes bad credit scores can get in the way of getting approved for a personal loan. Fortunately, there are several ways you can do that can help you get approved for a loan despite your scores. One of the foolproof ways you can try doing this is by getting a guarantor. If you’re new to the word, let this article break down to you what a guarantor is.

What is a Cosigner loan?

When you don’t qualify for a loan, especially if due to bad credit scores, the tendency is borrowers would instead apply for a guarantor loan. How this works is that you get a person who can guarantee that you would pay for the loan by agreeing to pay the amount of the loan in the event that you, the borrower, fail to make the necessary payments.

Who is a Cosigner for a Loan?

The criteria for guarantors typically depends on the financial institution or lender but here are the general qualifications for a guarantor.

  • Must have good credit. The most essential the universal criteria is that someone who will guarantee to pay for your loan must have a good credit score as this proves his or her creditworthiness. In essence, a good credit score tells the lender that the guarantor can cover for the loan.

  • Has a stable and steady source of income. Financial institutions and lenders like banks check any borrower’s source of income as this tells them if the individual can pay for the loan. Your guarantor must be able to show proof of income as this also stands as a proof that he or she can pay for your loan.

Owns a home. This one is a case to case basis but typically, those who owns a home can get better access to guarantor loans with better conditions as opposed to non-homeowners.

What is a Loan Guarantor?

When a person takes out a loan, the lender verifies his or her income and ability to pay the loan. However, not all borrowers pass this requirement, thus the lender or bank will ask the borrower to provide a guarantor for the loan. This is usually the case if the loan officer discerns that the borrower has poor, weak or zero credit. A loan guarantor is similar to a loan cosigner, who is basically obligated to settle the debt in case the principal borrower cannot.

Having a guarantor for the loan somehow reduces the risk of the lender in case of non-payment. This means in case the borrower defaults loan payments, the guarantor will be deemed responsible for settling the remaining debt. The guarantor must be ready to take over the debt as indicated in the loan agreement which he or she co-signed.

Being a loan guarantor is not easy – the lender will go after you in case you agreed to be a guarantor for a loan. If someone asks you to become a guarantor for a loan, remember that a defaulted loan will also affect your credit negatively which can have serious repercussions in your ability to take out a loan someday.

In case the borrower defaults on his or her loan, your relationship can be seriously affected. Some lenders will require a guarantor to attach his or her property to the loan, which means they can seize the asset in case of non-payment. Before agreeing to become a guarantor, talk with the borrower so that you can assess if you are indeed willing to take on such responsibility.

Where Can I Find a Cosigner Loan?

The common misconception is that one can only avail of a loan from a bank. There are different types of loan providers in the market. You should choose a loan provider based on your needs and qualifications. The following are your options when you want to obtain a loan.


Banks offer a variety of loan products from personal loans, home loans, car loans and more. When applying for a loan from a bank, you will be required to have a good credit, aside from the basic loan requirements, in order to pass their criteria. It will also help if you are an account holder of the said bank.

Credit Unions

Credit unions are non-profit organizations that issue loans to members. These entities usually have less stringent requirements compared to banks. A member can borrow money from a credit union despite having bad credit.

Loan Sharks

Loan sharks are individuals or companies offering loans illegally. Because they are not regulated by the government, the loans they offer have very high interest rates and fees. It is best to avoid loan sharks since they operate illegally thus they can resort to threats and blackmail to get their money back from you.

Online Lenders

Online lenders are direct lenders who are authorized to offer consumer loan products. Unlike banks and other traditional loan providers, their interest rates are much lower since they have less operational expenses. Online lenders boast of fast and convenient loan application processing which means you are likely to receive the money that you need much faster.

Get The Money You Need

Apply to Borrow £1000 to £25,000*