When you have a poor credit score, it is more than likely that you will be considered a risk and find it difficult to get loans from lenders. This situation can also arise if you have no credit history just because you have never borrowed money or have no credit card. Even so, it is possible for you to get guarantor loans. You still need to be an adult and have a proven source of income, like a job, but in addition to this, you will need to find someone who can stand as a guarantee for the amount loaned to you.
Who Can Help You With Guarantor Loans Today?
In most cases such guarantors are family members or friends who may have faith in your ability to make the payments and not involve them any further in the transactions. These underwriters need to be people who themselves have a good credit score and the financial ability to repay the borrowed amount in case you default on your payments. Guarantors need to be aware of this responsibility and still have faith in your ability to make the required payments so that the burden does not fall on them. Once a person with bad credit score who has obtained a guarantor loan is regular in meeting the payments on the new loan, this, in turn, can help to improve their credit score, and this makes it easier to obtain loans in future, independently.
The Benefits You Receive
There are many benefits to getting such co-signed loans, the primary one being that the process of getting a loan will obviate the need for the borrower going through a credit check. There may still be preliminary inquiries made, but this will in no way affect the status of the loan itself, as this is backed up by a guarantor that the lender has approved. Another benefit is that the fact that you have got such a loan, you now have the chance to improve your credit score by being prompt in meeting all your obligations on this new loan. As this is guaranteed by the co-signer of the loan, this is certain, and can help you to boost your credit score. The third benefit of guarantor loans is that they allow you to secure larger amounts as loans, unlike the limitations that you will have to payday loans. Payday loans are another avenue for people with poor credit score to obtain smaller sums of money to help them tide over financial problems.
In most cases of these loans, there is no need to pledge any assets or securities but is an assessment of the lender in the ability of the guarantor to repay the loan. Guarantors are required to sign papers that enable them to give a legal guarantee, and at times may be necessary to submit certain documents to prove their financial standing and worth. The time needed for receiving the loan amount is also quite short as long as the necessary papers and signatures have been submitted in the manner required by the lenders.