The criteria for applying for a guarantor loan

The borrower and the guarantor are the two parties involved in the application process of a guarantor loan. Since they play different roles, they come with separate criteria.

Whilst the requirements vary from lender-to-lender, the companies we feature on our comparison table tend to follow the criteria below:

The criteria for the borrower

• Over 18 years of age
• UK resident
• Minimum income of £500 per month
• Working mobile phone and email address
• Working debit account
• No bankruptcy, IVA or CCJs

The criteria for the guarantor

• Over 25 years of age
• UK resident
• Minimum income of £500 per month
• Working mobile phone and email address
• Working debit account
• No bankruptcy, IVA or CCJs
• Good credit history
• Tenants or Homeowners

Understanding the criteria

Age: The minimum age to apply is 18 years old, however, the guarantor must be at least 25, which reflects the extra responsibility that is involved. Also, by the age of 25, they are likely to have built up a larger credit history and earned a better salary and this will make it easier for the lender to assess the risk involved and how much the applicant can borrow.

Both parties will need to have their age approved before proceeding with the application. This can be performed automatically via a credit check or by the lender requesting proof.

UK residency: Since we feature guarantor lenders that are based in the UK, they require customers to be residents of the UK too. This may exclude applications from Northern Island, Channel Islands and Isle of Man.

This is because the lenders want to be able to contact their borrowers and guarantors if need be. Whether it is confirming their details or following up on repayments, there is less risk involved if the customers are based locally in the UK. Therefore, it is unlikely that the loan will be approved if the guarantor is only living in England temporarily or is based overseas.

Employment status: Both the borrower and guarantor need to be in current employment, full-time or part-time, earning at least £500 per month. By being employed, it gives the lender confidence that they can put their monthly income towards the repayments each month.
Applicants will usually be required to show proof of salary and employment by sending in a copy of their pay-slip or bank statement. This can be sent to the lender by scanning the document and sending it via email or by post.

Mobile phone and email address: Applicants are required to have a working mobile phone and email address so they can be contacted anytime by the lender and to confirm their identity.

The way this is verified by the lender is by asking customers to electronically sign the loan agreement, also known as an ‘E-sign.’ The link to the agreement is sent via email and to sign the document, they have to enter a PIN code sent to their phone by SMS.

Working debit account: During the application process, the borrower and guarantor will be required to provide their debit account details. This is where the funds will be sent to and where collections will be taken from.

Collections are not made via direct debit but a process called Continuous Payment Authority which allows lenders to automatically schedule payments each month without customers needing to set anything up. For more information, read our guide on how repayments work.

Good credit history: It is expected that guarantor loan borrowers will have a less than perfect credit score and will need the assistance of a guarantor to get the finance they need. Borrowers cannot apply if they have experienced bankruptcy, IVAs or CCJs in the last 3 years because it presents a high risk to the lender that the customer will default.

Guarantors that have a good credit history of paying other loans and credit card bills in the past will be considered less risk to lenders. Therefore having a person with a good credit score to guarantee your loan will increase your chances of being funded.

Who is not eligible to apply

Based on the criteria above, the individuals not eligible to apply for a guarantor loan include those that are:

• Unemployed
• On benefits
• Earning less than £500 per month
• No guarantor
• Live outside of the UK (both borrower and guarantor)
• Those with serious debt issues including bankruptcy, IVA or CCJ

Further checks

If you meet the criteria mentioned above, you will be eligible to apply for a guarantor loan. However, each lender will always conduct further checks to review your affordability and credit history and decide if you are right for their loan. The checks carried out will also impact the amount you are able to borrow which will also vary between lenders.

Our comparison table clearly shows the loan amount, cost and duration for each lender. As the criteria may vary between some providers, it is always important to double-check this with the company before applying.