How to Choose a Co-Signer for a Lease Agreement
Moving to a new home is exciting, especially if you are getting your own accommodation for the first time. But it can be disheartening if you can’t rent because a future owner denies your rental application. This can happen if you move out of your parents’ house and have no rental reference. Another situation where this could happen is if you don’t have any credit or credit history.
If you are not eligible for a lease due to your limited or poor credit history, many landlords will still allow applicants to rent with a co-signer. Getting a co-signer is standard practice in the rental world, and it’s a great way to start building credit and a solid rental benchmark at the same time.
What is a co-signer?
A co-signer is someone who agrees to sign a lease, loan agreement, or credit application with the principal applicant. When renting or renting an apartment, this is a legal commitment where the co-signer accepts full responsibility for paying the rent if the primary tenant does not pay. The co-signer usually does not live in the rental, but helps the tenant qualify for the lease.
Why would you need a co-signer on a lease?
Payment issues are a landlord’s number one concern about tenants. A landlord unsure of a potential tenant’s ability to pay may ask for a co-signer or guarantor on the lease instead of denying the rental application.
There are several reasons why a landlord may need a co-signer, especially for those who are moving for the first time. If you’ve never lived alone, you may not have a credit history or previous rental reference. This can lead a landlord to request a co-signer on your lease.
It’s common not to have a significant credit history if you move on your own initially, but it makes you riskier because you haven’t yet proven that you’re meeting your financial obligations on time or that you have accumulated history. financial stability.
Having a low credit score can also be a reason you need a co-signer. You may have made financial mistakes in the past that affected your credit score. Even if you’re more reliable now, it’s still about rebuilding your credit score by making consistent payments over time.
A co-signer who is responsible for the loan if the tenant doesn’t pay alleviates the landlord’s concern if any of these situations are true. Since the co-signer is legally obligated to pay the lease if the borrower does not make the payments, they provide insurance to the landlord.
Factors to consider when choosing a co-signer
There are several considerations to take into account when choosing someone to ask to co-sign a lease for you. You want to be sure that they are someone who you are comfortable with and who you can talk to openly and confidently. They also need an established credit history. If the person is planning on making a big purchase in the near future, such as a house or even a car, now might not be a good time to ask them to co-sign your lease.
A family member or close friend who knows you well and trusts you will make a good co-signer. If this is your first time moving, many friends your age may not have gotten enough credit at this point to qualify as a co-signer. If this sounds like you, then your parents might be your best bet.
How to get someone to co-sign a rental agreement with you
It’s a very personal request to approach someone and ask them to co-sign a lease or rental agreement for you. Failure to adhere to your rental terms could not only impact your credit, but the co-signer’s as well. Choosing someone who knows you well and trusts you is crucial.
When you approach the person of your choice with your request to co-sign for you, you will need to explain to them why you need a co-signer. Think ahead to how you will assure them that you are responsible for the situation. For example, what would you do if something went wrong and you couldn’t pay your monthly rent? Having a well thought out backup plan and sharing it with them will help allay their worries and assure them that you are trustworthy.
Offer them the opportunity to meet with you periodically and thank them for believing in you. Their help will be a big factor in helping you build your own credit, so the next time you rent, you won’t need a co-signer.
Consider your options
Whether you’re buying your first apartment or moving to a new one, securing a lease with poor or no credit can be a challenge. You may be able to find an apartment that does not require a credit check. You may be able to negotiate a larger security deposit to make up for your credit history (or lack thereof). Or, you can find a co-signer for your lease to help you qualify for a lease and start building your credit and references for the future.
Before asking someone to co-sign, it’s important that you understand the importance of commitment to them. Consider the relationship you have with the person and the impact of the co-signing relationship on that.
Build your future
Once you’re approved for a lease and you’re in your new space, take the financial commitment seriously. Paying your rent and bills on time will improve your credit score. Getting a credit card and paying on time will also help increase your credit. Once you’ve built up your credit and established your rental history, you may want to consider removing the co-signer from your lease.
Getting your first apartment or rental by securing a lease with a co-signer has provided many people with the path to their own accommodation. Ready to find your next home? Search for apartments on Zumper and find the one you call your own.