Moving to a new home is exciting, especially if you’re getting your own place for the first time. But it can be discouraging if you’re unable to rent because a prospective landlord declines your rental application. This might happen if you’re moving out of your parent’s home and have no rental references. Another situation where this might happen is if you have no credit or so-so credit history.
If you don’t qualify for a lease due to limited or poor credit history, many landlords will still allow applicants to rent with a cosigner. Getting a cosigner is a common practice in the rental world, and it’s a great way to start building credit and a solid rental reference at the same time.
What is a cosigner?
A cosigner is a person who agrees to sign a lease, loan agreement, or credit application along with the primary applicant. When leasing or renting an apartment, it’s a legal commitment where the cosigner accepts full responsibility for paying the rent if the primary renter fails to pay. The cosigner generally doesn’t live in the rental, but they are helping the renter qualify for the lease.
Why would you need a cosigner on a lease?
The top concern a landlord has about renters is payment problems. A landlord uncertain about a prospective renter’s ability to pay may request a co-signer or a guarantor on the lease instead of declining the rental application.
There are several reasons a landlord might require a cosigner, especially for those who are moving out for the first time. If you’ve never lived on your own, you may not have a credit history nor a previous rental reference. This can lead a landlord to request a cosigner on your lease.
Having no significant credit history is common if you’re moving out on your own initially, but it makes you more of a risk because you haven’t proven yet that you make your financial obligations on time or that you have built up a history of financial stability.
Having a low credit score may also be a reason you need a cosigner. You may have made some financial missteps in the past which affected your credit score. Even though you’re more reliable now, it still is a matter of building your credit score back up by making consistent payments over time.
A cosigner who is responsible for the loan if the renter doesn’t pay alleviates worry on the landlord’s part if any of these situations are true. Since the cosigner is legally obligated to pay the lease if the borrower fails to make the payments, it provides assurance for the landlord.
Factors to Consider When Choosing a Cosigner
There are several considerations to take into account when you’re choosing someone to ask to cosign a lease for you. You want to be sure this is a person who you are comfortable with, and whom you can speak to openly and confidently. They also need an established credit history. If the person is planning on making a large purchase soon, like a house or even a car, this may not be a good time to ask them to cosign your lease.
A family member or close friend who knows you well and trusts you will make a good cosigner. If you’re moving out for the first time, many friends your age may not have established enough credit at this point to qualify as a cosigner. If this sounds like you, then your parents might be your best option.
How to Ask Someone to Cosign a Lease Agreement with You
It is a very personal request to approach somebody and ask them to cosign a lease or rental agreement for you. If you don’t meet your rental terms, it could not only impact your credit but the cosigner’s as well. Choosing somebody who knows you well and has faith in you is crucial.
When you approach the person of your choosing with your request to cosign for you, you’ll have to explain to them why you need a cosigner. Consider in advance how you’ll assure them that you will be responsible in the situation. For instance, what would you do if something went wrong and you couldn’t make your rent one month? Having a well-thought-out backup plan and sharing it with them will help ease their concerns and assure them that you are trustworthy.
Offer them the opportunity to check in with you periodically and thank them for believing in you. Their help will be an important factor in helping you establish your own credit, so the next time you rent you won’t need a cosigner.
Consider Your Options
Whether you are getting your first apartment or moving into a different one, getting a lease with poor or no credit can be a challenge. You may be able to find an apartment that doesn’t require a credit check. You may be able to negotiate a larger security deposit to offset your credit history (or lack of it). Or, you can find a cosigner for your lease to help you qualify for a lease and start to build your credit and references for the future.
Before you ask somebody to cosign, it’s important that you realize the significance of the commitment to them. Consider the relationship you have with the person and how the cosigning relationship might impact that.
Building Your Future
Once you get approved for a lease and are in your new space, take the financial commitment seriously. Paying your rent and bills on time will improve your credit score. Getting a credit card and paying on time will help build your credit as well. Once you’ve built up your credit and established your rental history, you can look into removing the cosigner from your lease.
Getting your first apartment or rental by getting a lease with a cosigner has provided many people the path to getting a place of their own. Ready to find your next home? Search for apartments on Zumper and find the one you’ll call yours.
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