I applied to rent a New York City apartment but my income isn’t sufficient so my landlord asked me to a guarantor. My father would do it, but he’s worried that it will affect his credit. Is that a real concern?
Applying to be your guarantor should not impact your father’s credit score, but the landlord’s request will likely show up on his credit report. And it’s important to keep in mind that if you fail to pay your rent, and your father doesn’t bail you out, then both your credit scores would be negatively affected.
When your landlord pulls your parent’s credit report, the inquiry shouldn’t decrease their credit score. Even if he has had other recent credit inquiries, the impact would be minimal “and not to the extent that it alone would turn a good score into a bad one,” says Arik Lifshitz, CEO of DSA Property Group, a property management and development firm.
When it comes to credit requirements, a guarantor must have relatively high credit anyway. Lifshitz says a FICO score of 700 or higher would be automatically approved, and a score of 600 or lower would be denied. Scores in between are considered on a case-by-case basis.
“We don’t only look at the score, but rather at the individual accounts to make sure they are consistently paid on time,” he says.
“Being a guarantor means that you are not only responsible for your own financial obligations but are also responsible for someone else’s in the event they are not able to,” says Cristina Chiarizia, director of closings at Maxwell Kates, a real estate management company based in Manhattan. So that means if your father is approved as guarantor, his finances are considered to be solid.
In addition to having good credit, landlords typically prefer that they reside in the tri-state area and that they make at least 80 times your monthly rent. Even if you default on your rent, your parent’s credit score shouldn’t be impacted, Chiarizia says. But, they’re responsible for paying your missed rent.
According to PropertyNest, in the event that your guarantor cannot make your rent payments if you default, then both your credit and their credit would be negatively affected.
If your parent is wary of being a guarantor, another option is to use a professional guarantor service like Insurent (a Brick Underground sponsor). To qualify for Insurent, you must have a minimum annual income of 27.5 times the monthly rent or cash assets or publicly held securities of a minimum of 50 times the monthly rent—plus decent to good credit.
Being a guarantor is a serious responsibility, but as long as you pay your rent on time, or they uphold their responsibility if you default, their credit score shouldn’t be impacted.
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