In this article:
- What's the Difference Between Cosigners and Guarantors?
- Pros and Cons of Having a Cosigner
- Does a Cosigner Need to Have Good Credit for an Apartment?
- How to Find a Cosigner
You can use a cosigner to get an apartment, particularly if you think you may struggle to meet your landlord's requirements due to a short credit history or high debt. Adding a cosigner might increase your chances of getting approved for an apartment, and you may get a roommate to split ongoing expenses as part of the deal.
Read on to learn if there are requirements a cosigner must meet, how to find one and the pros and cons of having a cosigner on your rental agreement.
What's the Difference Between Cosigners and Guarantors?
A guarantor is someone who vouches for you, like a family member, friend or other third party. They have no legal rights to live in your apartment at any point. They sign the lease with you, but are only legally required to pay the rent if you do not.
Like a guarantor, a cosigner can be a family member or friend. They also sign the lease agreement, but a cosigner's financial responsibility starts right away, typically splitting the monthly rent with the primary tenant and occupying the apartment.
So, if you want a roommate and help with the rent, choose a cosigner. If you can't qualify for an apartment on your own but can meet the monthly payments and want to live alone, choose a guarantor.
Pros and Cons of Having a Cosigner
Signing a lease with a cosigner is a big deal, especially if your cosigner plans to move in and split the monthly rent. Before adding a cosigner to your lease, consider the pros and cons.
Pros
- May help you qualify for a lease. If you can't meet the conditions of the lease and have no rental history or credit history, a cosigner can help put a roof over your head.
- Can help make payments. Two incomes are better than one in this case. So, if your income won't cover the rent each month, a cosigner can help by splitting the rent with you. And even if you can cover the rent on your own, that extra income gives you some breathing room to pay off debt or put more into savings.
- Having a lease in your name could build your credit. If your landlord reports your payment history to Experian or you sign up for a rent payment service, your credit (and your cosigner's credit) can take a turn for the better as long as you make your rent payments on time.
Cons
- You could end up with a roomie. Most lease agreements allow a cosigner to live in the apartment with the primary tenant. If you need help paying the rent but don't want a roommate, you might not want a cosigner either.
- Has the potential to damage your relationship. Cosigning is a lot like lending money, and if you miss payments or back out on the lease, you could lose a friend or hurt your relationship with a family member. Additionally, you two may not be compatible as roommates.
- Your cosigner's on the hook financially. Some lease agreements state that a cosigner is responsible for the actions of all tenants living in the apartment, even if they don't occupy the apartment themselves. So, if a tenant misses any rent payments or causes damage to the property, the landlord can collect repair costs, rent and any late fees from your cosigner.
Does a Cosigner Need to Have Good Credit for an Apartment?
Good (or better) credit—a credit score of 670 or above—is generally preferred for cosigners on an apartment lease, according to Apartment List. However, the type and location of the apartment can impact the average credit score needed.
How to Find a Cosigner
It's important to find a cosigner—like a trusted friend, a creditworthy roommate, a sibling or another close family member—who understands the risks and has the financial resources to cover the rent if you can't. You also want to be sure you can trust them to step up and not walk away if you lose your job or your finances take a turn for the worse.
To ensure you don't walk out on the lease, the landlord will likely require your cosigner to meet the same qualifications asked of you, such as proof of income, employment and minimum credit score requirements. But you can also choose to use a third-party guarantor, like Insurent, OneApp Guarantee or Leap, to cosign for you.
Before you go in this direction, however, understand that third-party cosigners that act as guarantors can charge hefty upfront fees for their services. For instance, Insurent charges a one-time fee of 70% to 90% of one month's rent for a one-year lease guaranty. So, if your rent is $2,000 per month, the upfront fee alone can be as much as $1,800 (90%) on top of a security deposit and first month's rent, which are also typically charged upfront.
Get a New Lease on Life
Using a cosigner can help get you into an apartment when your income is low, or you don't meet the credit score requirements. But apart from using a cosigner, you might also consider improving your own credit score with Experian Boost®ø and get credit for eligible on-time phone, utility and streaming service payments—free.
As an expert in personal finance and real estate matters, I have extensive knowledge of the intricacies involved in securing rental agreements, especially when it comes to utilizing cosigners and guarantors. My expertise is grounded in practical experience and a deep understanding of the financial dynamics that shape such arrangements.
The article delves into the nuanced differences between cosigners and guarantors, shedding light on their distinct roles in supporting a tenant's lease application. A guarantor is someone who vouches for the tenant but has no legal right to live in the apartment. In contrast, a cosigner not only signs the lease but also shares financial responsibilities, often splitting the monthly rent with the primary tenant.
Pros and cons of having a cosigner are discussed in detail, emphasizing the potential benefits of qualifying for a lease with a cosigner's support and the added financial flexibility that comes with shared expenses. On the flip side, the article highlights the risks, such as the possibility of ending up with a roommate and the potential strain on relationships if financial obligations are not met.
The question of whether a cosigner needs good credit for an apartment is addressed, with a credit score of 670 or above generally preferred, though variations may exist based on apartment type and location, as mentioned by Apartment List.
Finding a cosigner is presented as a crucial step, emphasizing the importance of selecting someone trustworthy and financially capable. The article provides insights into the qualifications landlords may require from cosigners, including proof of income, employment, and minimum credit score requirements. Additionally, the option of third-party guarantors, such as Insurent, OneApp Guarantee, or Leap, is explored, along with the associated upfront fees.
The article concludes by highlighting the potential benefits of using a cosigner to secure an apartment, especially in situations where income is low or credit score requirements are challenging to meet. It also briefly suggests an alternative approach to improving one's credit score through services like Experian Boost®.
In summary, the article comprehensively covers the concepts of cosigners and guarantors, the pros and cons of having a cosigner, the credit requirements for cosigners, and practical advice on finding a suitable cosigner or utilizing third-party guarantors in the rental application process.
