Guarantor loans-Dont apply until you have read this first
Guarantor loans have increased massively in popularity over the last 18 months or so and it’s easy to see why. Lenders traditionally lend money to people who they know will pay them back (or at least they think will pay them back) and they do this through a mixture of risk assessment and checking against loan criteria. Now whilst this has never been much of an issue, in recent times (and since the advent of the credit crunch), lenders are making it much harder for people to get a loan and in some cases, getting an unsecured loan is proving almost impossible.
And that is where guarantor loans come in.
A guarantor loan allows an individual with a particularly poor credit history to get a loan even if they have been to every other finance provider in the UK and been told no. The beauty of this type of loan is that anyone who is working can apply, safe in the knowledge that they will be assessed on their guarantor’s ability to repay the loan, not their own and that is what makes these types of loans guaranteed.
So, we have established that there is a huge market out there for loans with a guarantor, but what do the lenders look for and how do they decide who to lend to and who to decline? Below we list the top 5 reasons why a lender will decline your application for credit.
1. Too many addresses. Lenders hate this as moving around a lot suggest that there is something to hide on behalf of the borrower (even if this isn’t the case). If you do move around a lot, make sure that you register yourself on the electoral roll and get your utility bills changed into your name and new address as soon as you possibly can.
2. No active credit. You may be the most organised and credit worthy individual in the world, so much so that you make sure you always pay your credit card off in full each month and you never take new credit out. You may also have paid your mortgage off and in any other world, this is perfect credit behaviour. However, if you are standing as a guarantor for someone then lenders will look at your credit profile and worry that you have no active credit so how can they possibly know if you are going to pay or not as they have no track record to go on. Crazy…but true.
3. Not enough disposable income. You could have the best credit score in the world and earn ?10,000 a month but if your outgoings are ?9,500 a month then you will also be declined…even if you have never missed a single payment.
4. A new job. As long as you have not had a break in employment then you should be ok but every lender that offers guarantor loans will need to see a continuous employment history and will ask for proof if they are in any doubt.
5. No landline telephone number. This may sound stupid and petty but this is one of the biggest reasons why people get declined for a loan. Anyone can get a mobile and lenders and finance companies know this which is why they usually INSIST on a landline telephone number. If you don’t have one then you are in trouble and will probably be declined.
So as you can see, getting accepted for a guarantor loan isn’t as straightforward as you might have thought but as long as you follow these guidelines then you should be ok. Remember, never tell lies (even white ones!) because loan companies will always find out and if they do, they will immediately decline your a loan application for not being completely truthful.
Chris Davison is the owner of the UK’s specialist. You can find out more by visiting them at http://www.guarantorloans.co/
Processing your request, Please wait....
