04 Jul Can I Get a Guarantor Loan With Bad Credit?
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A guarantor loan can be a great way for those with bad credit histories to access the finance they need. By having an extra person that you know to act as your guarantor, you can increase your chances of being approved for a loan, despite being turned down by mainstream lenders due to bad credit.
This is because a guarantor can help to give the lender more security that the loan will be repaid – security they would have otherwise got from an applicant’s good credit score.
Proper Finance works with some of the best guarantor lenders in the country, helping borrowers to find the best loan product to suit their needs. By comparing with Proper Finance, borrowers can apply for loans of ?500 to ?10,000 to be repaid over a 12 to 60 month period.
What Is a Guarantor Loan?
A guarantor loan works by having an extra person co-sign the loan agreement and guarantee repayments. So in the event that you cannot make your monthly repayments, your guarantor will step in and pay on your behalf.
For the lender, this provides extra security knowing that they are more likely to recover their funds, and if your guarantor has a good credit rating and is a homeowner, this will increase your chances of being approved.
Much like personal loans, guarantor loans are commonly used for lifestyle purchases including paying for home improvements, weddings, debt consolidation, education and more.
Proper Finance works with the best guarantor loans companies in the UK, allowing you to borrow ?500 to ?10,000 repaid over 12 to 60 months.
Yes, as previously mentioned, guarantor loans are commonly taken out by those with adverse credit histories. Guarantor loans lenders often accept those with bad credit due to the credit-worthiness of the guarantor.
The main borrower will typically have to elect a guarantor that has a good credit rating, along with other qualities such as owning a home and having a regular, stable income.
Our partners will also consider guarantors that are tenants and living with parents or friends, but knowing that the guarantor has their own mortgage and home means that they should always be easier to contact.
Once the loan has gone through, you cannot stop being the guarantor for the main borrower until the loan has been paid off.
The guarantor lenders we work with at Proper Finance will take a view on individuals with a history of bad credit, CCJs and bankruptcy, provided that you have a good guarantor to back up your loan application. If this is not for you, consider applying for a no guarantor loan so that you can work with the lender directly.
Who Could Act as a Guarantor for My Guarantor Loan?
The most successful guarantors are typically parents, spouses and siblings aged 18 to 75. You ideally want someone who you are close to, in regular contact with, and can speak openly about your finances.
Whilst friends and colleagues are also suggested, you ideally want someone who you know you will be in contact with throughout the loan term (up to 5 years).
Can a Guarantor Loan Improve My Credit Score?
By making regular monthly repayments on your guarantor loan, your credit record is updated through the three main credit reference agencies in the UK. Therefore, applying for a guarantor loan gives someone with a history of bad credit to get used to making regular payments and prove their creditworthiness.
A series of several, on-time repayments will improve your credit score, helping you access other forms of finance in the future and at more favourable rates. Customers will need to keep up with all kinds of repayments and avoid falling into arrears for other credit products to maintain a healthy credit score.
What Is the Eligibility Criteria for a Guarantor Loan?
In order to be successful in your loan application, you will have to meet certain criteria. This criteria will typically vary from lender to lender, however, some of the main requirements applicants will typically need to meet include the following:
- Be in employment (either full- or part-time).
- Show evidence that you can keep up with monthly loan repayments.
- Be a UK-based resident
- Be over the age of 18.
- Have a valid debit card
Guarantors will have their own list of criteria to meet for the loan. With a guarantor loan, lenders will typically only approve guarantors who show that they are financially secure and responsible enough to keep up with repayments.
Apply for a Guarantor Loan With Proper Finance
Proper Finance is dedicated to helping its customers find the best financial products for them, something that has been acknowledged by our recipient of numerous broker awards over the last 12 years.
We offer an effective way to compare guarantor loans, with a representative APR of around 49.9%. Applicants can start by completing their details online and we will process their application as quickly as possible.
Simply click on the “apply now” button below to complete our online application form. Proper Finance will then assess your details with our recommended guarantor loans provider.
Successful applications are typically funded within 24 to 48 hours since the start of the application, and transferred to the guarantor’s debit account in one lump sum.