Introduction

If you need to apply for a mortgage, vehicle loan, or other types of financing but do not have a good enough credit score to get approved on your own, a cosigner's support can be quite helpful. A cosigner gives the lender more assurance that they will be paid back by agreeing to be responsible for loan repayment in the case of your default. By agreeing to cosign for a loan, the cosigner assumes full responsibility for the debt with no assurance of repayment. Below are some choices to consider and what to do if you can't get a top alternatives to a co-signer.

Alternatives to Having a Cosigner

Become a Roommate

Look for a roommate or roommates already committed to a lease but may use financial help if you're looking for a new place to live. You might be able to sublease an apartment from someone who is locked into a lease but will be out of town for a prolonged time or needs to move fast. Another choice would be to rent a room from someone who already has a lease for the apartment you'll be sharing.

The landlord may not conduct a new credit check or care about who occupies the property if the landlord has a signed lease agreement from a tenant who has already been approved following a credit check, security deposit, and agreement to pay rent for the entire lease term. This is provided that the landlord continues to receive timely rent payments from the original tenant. You should request to see a copy of someone's lease before deciding to sublet or share a room with them. The person named on the lease must obtain formal permission from the landlord before allowing a roommate or subtenant to move in. You should be aware that if you send payments directly to the person on the lease rather than the landlord, they may decide to keep the money instead of paying it to the landlord.

Use a Cosigner Service

You might also employ a cosigner service to increase your chances of getting accepted for a rental property. For a fee, they'll guarantee your landlord that they'll pay your rent if you're unable to. You'll have to fill out an application and pay a charge to expedite the approval process using a cosigner service. If approved, the service will provide you with a cosigning certificate that you can attach to your rental application. The final say on whether or not to accept a cosigner belongs to the landlord.

If the service is obliged to make any rent payments on your behalf, you will be liable for paying the service back. One company offering this service is Insurant. You will be asked to pay a one-time, nonrefundable flat fee that is a certain proportion of your monthly rent if your apartment application is accepted. Keep in mind that if a landlord refuses to accept a guarantee from a cosigner service, a larger security deposit or prepayment of rent can help you get an apartment.

Try a Person-to-Person Lender

If banks and other traditional loan providers have rejected your application, peer-to-peer lending may be an option. Prosper and Lending Club are significant participants. Both companies will review your credit history when you apply. You can choose how you want to use the money. If your credit is bad, you could anticipate paying higher loan rates or completely turning it down. Try it and see. A 640 credit score is required for Prosper. Other reports claim that Lending Club requires a minimum credit score of 660.

Verify or Reconstruct Your Credit Record

A cosigner could be needed if the borrower has bad credit or no credit history. The three main credit reporting companies monitoring your use of a secured credit card are Equifax, Experian, and TransUnion. Make one small monthly purchase, and pay it off before the deadline. You will have the low credit usage ratio and solid payment history required for a high credit score after six months of careful use of a secured credit card, which includes making small purchases and paying them off swiftly. If your salary is sufficient, the requirement for a cosigner to obtain a loan or rent an apartment can vanish. It may take longer to repair damaged credit because negative things can remain on your credit record for up to seven years. Your credit report must show lenders that your transition to on-time payments is long-term.

Conclusion

Most of us are familiar with what it's like to be unable to afford the home or essentials we think we need. Recall that the choice was made based on cold, hard numbers if you ask for a loan or a lease and get denied.