Being a Guarantor For a Loan

All You Need to Know About Being a Guarantor For a Loan

There are so many people out there that find themselves unable to get the loan that they need. If you're thinking about being a guarantor for someone, then you're doing a very nice thing. Of course, you don't want to do a foolish thing at all. Have you already been asked by the person, or are you just planning on making yourself available if you're asked in the future?

It's come up in my life a few times before, and I have always been on the receiving end. I'm still

young, so maybe one day I can pay it forward to someone else. It sounds like a great idea, but you really do have to be careful. You have to be just as protective of your finances as you would if you were taking on the loan yourself. You don't need to be worried about what it will look like if you ask questions about whether or not the person is capable of paying back the loan.

What role does a guarantor for a loan play? Find out the answer to this and more by reading on.

How Big of a Deal Is It To Become a Loan Guarantor?

The person you're helping out by being a guarantor should be fine with all the questions and concerns. It's a big deal putting your name and your word on someone else's loan. What should you think about before you sign on the bottom line? You at least need to be aware of the consequences if things were to go south. For example, whatever happens with the loan is going to be reported on your credit report. So, that means the person you're signing for is either going to help you or hurt you.

Possible Long Term Ramifications

You're also going to have to realize that it's not just the loan appearing on your credit report in a negative or positive light. Being a guarantor for a loan may also impact your ability to apply for credit in the near future. Let's say you are going to be a guarantor for someone to get a mortgage. Next thing you know, you try to get a mortgage two years later. Well, you have to realize that the other person's mortgage, also on your credit, is going to be counted as a liability. 

Find out more about credit scores and the long term affect they may have by visiting the following link - http://www.investopedia.com/articles/pf/10/credit-score-factors.asp

Always Remember This!

Is being a guarantor going to stop you from getting your own credit? You're going to have to make that determination on your own. There are quite a few things to consider if you plan on being a guarantor as you can see. You're going to have to look at the situation and make sure it's the right thing to do.

Ensure you never fall into the hands of debt collectors, the following video explains why.