Being a guarantor

At the time of writing the below was accurate and deemed compliant by FCA standards. Please now read anything RewardRate-related below as purely hypothetical.

What is a guarantor?

A guarantor is someone - usually a friend or family member - who backs up a loan, by agreeing to make payments if the borrower doesn’t. Stepping into this role can be a wonderful thing to do for someone you care about. 

A guarantor loan can be the key to someone accessing fair and regulated finance, when they might otherwise struggle (because of a low credit rating, for example). If you’d like to buff up on everything this responsibility involves before committing, then you’re in the right place! 

It’s worth noting that some of the information in here is specific to people thinking about becoming a RewardRate guarantor. If you’re considering becoming a guarantor on another financial product out there (like someone’s rental accommodation or a loan from another lender) then some of the more general stuff here might still apply.

Who can be a guarantor 

A RewardRate guarantor can be nearly anyone, as long as they’re financially stable and have a strong credit history (ideally owning their own home).

Equally, if someone has asked you to be their guarantor it’s important that they’re somebody you know well, you’re confident in what the money is being used for, and you have a good idea of whether the loan is affordable for you both (we’ll triple check this before lending too). For a tidy list of what we need to see before approving a potential guarantor, check out our FAQ titled ‘Who can be a RewardRate guarantor?’.

Can a partner be a guarantor? 

Some lenders are cool with your partner acting as a guarantor, especially if you aren’t financially linked to each other in any way. RewardRate goes against the grain here and doesn’t accept partners as guarantors, with the reason being that they all-too-often do end up sharing finances with the borrower. If we did allow this, and the borrower or guarantor ran into a tough time financially then it might affect both people in a major way.

Guarantor responsibilities 

In a nutshell, the guarantor's responsibility is to make loan repayments if the borrower doesn't. 

Ideally guarantors will never have to do this. RewardRate takes hefty measures to check that any loan provided is affordable for borrowers and guarantors, but this isn’t a fail-safe prediction; sometimes unexpected things happen and borrowers can’t repay as reliably as they want to.

If repayments fall behind then we'll strive to work with our borrower directly before involving their guarantor (beyond keeping them in-the-loop with what's happening). We'll only ask the guarantor to make payment if we’re unable to come to a solution directly with the borrower. 

What do I do if I’m unsure about being a guarantor?

Being someone’s guarantor is a big deal, and so getting some guidance within this article is a good starting point! It’s great that you’re thinking about this now, rather than after committing or being outside of the pay out cooling-off period. Have a read of any FAQs here that touch on being a guarantor. There’s also a handful of reassuring information in the video below that should help you make a decision on whether to step into this role. Remember that it’s okay to say no to someone asking you to be their guarantor, especially if it’s not something you feel completely comfortable with. 

What else should I know?

You might still be left with thoughts like, “does being a guarantor affect your credit?” or “what checks are done on a guarantor?”. Everything you need to know about being a Rewardrate guarantor can be found between the documentation we send over and our FAQ Guarantor Guide. There’s a ton of important information that you really shouldn’t overlook in these resources, like what to do if you can no longer afford guarantor repayments and whether being a guarantor can affect your credit score.

Do you feel pressured into being someone’s guarantor on a RewardRate loan, and the application hasn’t been approved yet? Still in the post-pay-out cooling off period where loan money can be returned pretty easily? If you’re feeling iffy about any of it and want to talk it out then give us a call as soon as you can, on 01202084527.