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A co-signer takes on equal responsibility in an agreement, co-owns the asset, and is responsible for payments from the start of the agreement. A guarantor is only responsible for payments once the primary party of the agreement defaults and is then notified by the lender.
The primary difference between a co-signer and a guarantor is how soon each individual becomes responsible for the borrowers debt. A co-signer is responsible for every payment that a borrower misses. However, a guarantor only assumes responsibility if the borrower falls into total default.
If you guarantee a loan for a family member or friend, youre known as the guarantor. You are responsible for paying back the entire loan if the borrower cant. If a lender doesnt want to lend money to someone on their own, the lender can ask for a guarantee.
Having a co-applicant can make an application more attractive since it involves additional sources of income, credit, or assets. A co-applicant has more rights and responsibilities than a co-signer or guarantor.
In the context of applying for an apartment, a guarantor agrees to take on the obligations set forth under the lease (i.e. paying rent and fees) if you as the renter are unable to do so. This can be a parent, relative, employer, or anyone else who has an established credit history in the U.S.
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You are responsible for the entire loan amount This is the biggest risk: Co-signing a loan is not just about lending your good credit reputation to help someone else. Its a promise to repay their loan if they are unable to do so, including any late fees or collection costs.
Simply becoming a guarantor for someone shouldnt have an effect on your credit rating, as long as the main borrower manages to successfully make all the required repayments on time and in full. However, if they fail to keep up with repayments and you have to step in, this can put your credit score at risk.
Proof of identity, like a passport or UK driving licence. There will be credit checks that they need to pass. This looks at their past borrowing and gives an indication of how financially stable they are. Applicants will have to provide wage slips or proof of income if they are retired.

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