Whether you’re a first time renter, a renter who has a low credit score, or are simply looking to rent in a big city with a competitive renting market (NYC, we see you), you might want to consider using a guarantor. Rhino’s here to help you figure out what exactly is a guarantor, and the various methods to find one.
Meeting the requirements for housing applications can be a bit frustrating at times, especially in cases of bad or little credit. When properties require credit checks or even when you’re looking for a reason to heighten your application success, a guarantor or “co-signer” is a great option.
So what’s a guarantor? A guarantor or “co-signer” takes on the financial and legal responsibility of your rent payments in the event of any defaults; they guarantee that rent will be paid (even if you’re unable to pay it) and act as a layer of protection for your landlord or property management company. Along with you, the guarantor will also sign your lease and/or rental agreement. Typically the words guarantor and co-signer are interchangeable but there are slight differences, check out Rhino’s blog here to learn the differences between the two.
In New York City, the monthly rent can often be higher, and application requirements stricter, than other cities. If you are a renter with minimal credit history, bad credit, or an income that doesn’t meet a landlord’s heightened income requirements (e.g. 20-30x the monthly rent), that doesn’t mean you’re out of options when it comes to renting in NYC, most often in these cases a guarantor is the easiest choice.
Brokers, should you choose to use one, are a great reference for the property’s requirements and how to apply with a guarantor. In NYC specifically, it helps if the guarantor lives within the city or in the surrounding Tri-state area (i.e. upstate New York, New Jersey, Connecticut), as they will need to sign the original copy of the apartment lease agreement, and some landlords have rigid requirements about physical signatures being received within a quick 24-48 timeframe.
Other guarantor requirements can vary, but most will include some form or other of the following criteria:
A good credit score/credit history
Positive rental history
Meet the income requirement
Be able to provide many of the same financial documents requested from you as the renter; such as proof of income and credit report.
A common misconception among renters is that you must use an individual as a guarantor. Nowadays, there are a variety of options for you to consider! Here are a couple of the most common options, as well as a couple of methods to avoid a guarantor, should you choose to go that route.
For the most part, renters looking for a guarantor typically ask a family member or one of their close friends with good financial standing. It can be intimidating to ask someone near and dear to assume the legal liability of your monthly rent, but as long as you're comfortable with your relationship, it can be an easy option. First and foremost, confirm to your potential guarantor that you’re able to provide your rent independently and that they’re just acting as an added layer of protection to your management company. But if you want to give your friend or family member added peace of mind, you can also privately sign a written agreement with them of options to pay them back, in the rare event that they have to financially fulfill their obligations as guarantor.
If you can’t find an individual lease guarantor within your personal network, or are just too uncomfortable asking someone you know to take on that responsibility, there are still options for you!
You can use a third party – Rhino offers guarantor coverage which can satisfy landlords’ guarantor requirements, as well as other third party services. Other third party companies ask you to pay for their services with additional fees, and can cost an additional 4% to 10% of your annual rent.
If you find yourself without a personal connection to use as a guarantor, and prefer to avoid a third party option, there are ways to avoid using a guarantor at all.
If you move in with a housemate they can act as the additional financial security for your landlord. In other words, both of you might have a combined income that suffices as adequate to apply without a guarantor.
Some property managers are open to the option of accepting additional funds in your security deposit if your credit score is decent and you have a positive rental history. While not every landlord is willing to accept this, it never hurts to ask if you don’t meet the initial necessary requirements.
As you’ve just learned, Rhino’s guarantor coverage and security deposit insurance can help you save big! Especially in a competitive rental market like NYC, an apartment guarantor can help your rental application become more appealing to the landlord. Ask your future landlord about how to rent with Rhino, and be sure to ask them if you can use our guarantor coverage.