Agreeing to be a guarantor can feel like a formality. In reality, you are promising to repay the loan if the borrower does not.
It can appear on your report
A guaranteed loan can be reported in your credit history. If the borrower misses repayments, that may affect your credit profile as well as theirs.
It can affect your own borrowing
Lenders may consider guaranteed loans as a potential obligation when assessing your own applications, which can affect the amount you are eligible to borrow.
Before you sign
- Understand the borrower's repayment capacity.
- Ask the lender to share repayment status with you periodically.
- Keep copies of all documents you sign.
- Check your own credit report regularly while the loan is active.
This article is general information, not personalised financial or legal advice.