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If you can’t find a guarantor for a loan, what can you do? This week, we break down all of the options!
If you’ve ever read our blog before, you won’t need us to tell you again how great we think guarantor loans are. You probably already know they’re great for people who find it difficult to qualify for traditional lines of credit and allow them access to larger amounts and better rates than things like payday loans.
But what if you can’t find a guarantor for a loan? What do you do then? Do you have to settle for a more expensive option or give up on borrowing entirely?
We don’t think so.
Before you look for other borrowing options or give up on the idea of borrowing altogether, make sure you’ve done the following…
The most important thing to do: check the criteria for who can be a guarantor
When we talk to people who can’t find a guarantor for a loan, we often hear a lot of misconceptions about who can be a guarantor:
They have to own a house.
They have to be related to you.
They can’t be a partner or spouse.
It can’t be a colleague.
These are all untrue.
In fact, your guarantor can be anybody over the age of 21, as long as they have a regular income and can afford to make your repayments if you can’t. At Bamboo, we run a credit and affordability check on your guarantor too, to make sure they’re a suitable choice.
Outside of that, it’s up to you who you choose. However, we do recommend choosing somebody that you have a good relationship with and that you feel comfortable with.
As we’ve mentioned before, lots of us find it uncomfortable to talk about money. On top of that, money also has the potential to make relationships difficult, so make sure you choose somebody who understands the risks and is willing to help you.
But if you can think of a few people you haven’t asked yet — perhaps an aunt or uncle; a close friend; your partner; your sibling; your boss, even… — then you stand a good chance of finding a guarantor.
Just remember to handle the conversation with them sensitively and maturely. We’ve written a great guide on how to have that conversation about being a guarantor.
But remember, don’t rush into these decisions. Money can cause a lot of tension and stress in relationships, so make sure that you’re not going to make things fraught between you and a close one to get a guarantor loan.
If you still can’t think of a guarantor, it might be time to think outside the box…
If you find that you can’t think of a guarantor, don’t give up! You still have lots of other options.
Overdrafts, credit cards, the Bank of Mum and Dad, peer-to-peer loans…
The list of options if you can’t find a guarantor for a loan is quite extensive — in fact, we’ve written an article on all of those options — but there’s one that we think is slightly better: an unsecured loan for people with bad credit.
Because, while you might have assumed you’ll need a guarantor to qualify to borrow money, you might find that you’re eligible to borrow up to £5,000 without a guarantor, even if you don’t have a perfect credit score.
Some lenders (like us, hey! 👋) don’t think that a few slip-ups in your credit history should have a lasting impact on your financial future. Because of that, we can offer loan products that have been designed to help people who don’t qualify for traditional borrowing for a variety of reasons, from bad credit to no credit history to being self-employed.
To find out if you qualify to borrow without a guarantor, make sure you a complete soft-search eligibility check. That way, you’ll be able to find out without any effect on your credit score.
But what if you don’t qualify for these loans?
The best thing to do is to start working on repairing your credit score so you do qualify for these loans.
We’ve written extensively on improving your credit score, but here are a few things you can do immediately to help improve your chances of qualifying for a loan without a guarantor:
- Make sure you make timely repayments: timely repayments help demonstrate you’re a responsible borrower, building or improving your credit score. If you don’t have any debts, getting a credit-builder card to demonstrate financial responsibility by paying your balance in-full and on-time each month can be a wise move.
- Make sure you’re on the electoral roll: we know, this is a weird one, but being registered at your address on the electoral register can improve your credit score. Make sure you’re registered at the government site.
- Set up an overdraft: having an overdraft to act as a buffer can be a great move if you have unpredictable income or bills spread out over the month. The overdraft can help pay (in the short term) for repayments while you wait on your income, preventing missed payments on your credit file. However, do keep in mind that an overdraft is still a form of debt and it’s easy to end up relying on the credit line persistently.
For more information on guarantor loans — and more advice on what to do if you can’t find a guarantor for a loan — check out the guarantor loan section of our blog!
- Author The Bamboo Team
- Posted 21 October 2019