The act of being a guarantor shouldn’t appear on your Credit Report, but if you fail to make any repayments that the borrower has missed, you could end up with negative markers which will lower your Credit Rating and make taking out credit more difficult.
Will being a guarantor affect me getting a mortgage?
Mortgage lenders look at every aspect of your income and outgoings, including debts; because as a guarantor you may have to pay your friend/family member’s debt, this type of borrowing can have a negative impact when they calculate accumulated debts for affordability. You may find it stops you getting another mortgage.
Can I stop being a guarantor for a loan?
Unfortunately, if you have signed the loan agreement and the loan has been successfully paid out, you cannot stop being someone’s guarantor. Nonetheless, once you are their guarantor, you cannot change this.
Are Guarantor Loans a Good Idea?
Overall, a guarantor loan is a perfectly legitimate way to help someone with a poor credit rating get the finance they need. There is a financial risk involved, especially if you are a guarantor. However, the level of risk is no higher than it would be from a regular bank loan.
Does guarantor affect loan eligibility?
Effect on your future loan prospects: When you agree to become a loan guarantor for someone, your loan eligibility gets reduced. Effect on your credit history: Your credit report will mention that you are a guarantor for a loan. In fact, banks can also access your credit report as a guarantor for valid application.