Does an Apartment Guarantor Affect Credit?

Qualifying for an apartment on your own can be difficult, especially if you have a limited credit history or have recently started a new job. A guarantor, or cosigner, can help you qualify for the apartment of your dreams. While having a guarantor does not impact your credit, it you fail to uphold your lease agreement, both you and your cosigner's credit may suffer.

Guarantor

Guarantors are usually parents or other relatives but may be any person who is financially able and willing to vouch for your qualifications as a tenant. By cosigning on your lease, a guarantor is legally agreeing to pay your debts if you, the primary account holder, fail to do so. If you do not meet a leasing agent's qualifications, your guarantor must. Excellent credit and proof of financial stability are basic requires for a potential cosigner.

FICO

Due to an increase in the prevalence of credit fraud, the Fair Isaac Corp., which assigns credit scores based on a consumer's determined creditworthiness, has changed its policy regarding guarantors. In the past, people with a credit guarantor would be able to piggyback, or receive authorization to the credit card account of their guarantor, as well as an immediate improvement in their credit score. In an attempt to reduce this type of fraud, Fair Isaac no longer looks at cosigner's credit scores when determining a consumer's credit rating.

Urban Rentals

In large urban areas, where the competition for housing can be stiff, leasing agents often require guarantors to meet strict requirements. In New York City, guarantors for otherwise unqualified applicants may be required to make 80 to 100 times the monthly rent in annual salary and provide bank statements, investment records, and other financial proof of their reliability. Failing to uphold your rental agreement could result in your cosigner being held financially liable for thousands of dollars, which could negatively impact his credit score.

Considerations

Family members may be willing to cosign on your lease, but you may want to consider carefully before allowing them to do so. If you lose your job or become sick or injured, you may no longer be able to pay your rent, making your cosigner liable for payment. Likewise, since both your names would be on the lease, your credit as well as his could be impacted if the debt goes to collection or legal action is taken against you. Seeking a guarantor through a private agency may be a better alternative.