Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
A guarantor is a responsible individual who enters a lease agreement with a landlord. This individual agrees to carry out the obligations set forth under the rental lease, especially the payment of rent. A Guarantor is typically an immediate family member, preferably the parents. A friend or coworker can, however, also serve as a guarantor. There are also some third-party guarantor service providers as well who can act as Guarantor for a tenant. Any person who accepts the role of guarantor effectively consents to forfeit the collateral if the tenant falls behind on the predetermined payment.
Generally, tenants whose rental credentials are less than ideal will need a Guarantor. Often youngsters fresh out of college, in a low-earning job or unemployed, and have a poor credit history find themselves in need of one. However, foreign nationals could also use a Guarantor to rent an apartment. In this scenario, corporations can act as a Guarantor for their foreign employees.
Here are the key features of a Guarantor:
● Income stability: To become a guarantor, an individual must have a stable income, that ensures to take on financial responsibility for monthly rent or other payments if the tenant defaults. Typically middle-range to high-range income qualifies an individual to enter a lease agreement and swallow any costs.
● Willingness to repay debt: The main purpose of a Guarantor is to shoulder debt if a tenant fails. The guarantor must show a willingness to serve all the debts covered in their lease agreement.
● High-ranking credit history: A guarantor must have a clean credit report. High-ranking credit history ensures landlords that the individual is capable of performing their obligation when the actual tenant defaults.
As landlords will not accept guarantors at face value. Thus, they will put the individual acting as Guarantor through a strict screening process. To pass the screening, the Guarantor must provide tax returns, pay stubs, and bank statements, among other documents. Guarantors are a crucial part of renting. While they secure the landlords on the leasing front, a Guarantor also lowers the risk of eviction for the tenants.
