Guarantor vs. Cosigner: Important Differences You Need to Know

Lining up a guarantor or co-signer can help you move more quickly through your rental journey.

Just when you thought the long search was over, property management denied your rental application. Wait. What?

There are several reasons this might happen, but the big red flag for landlords and property managers is your financials — credit history, income, outstanding bills. Landlords need to protect themselves by making sure you can pay the monthly rent and those red flags get in the way.

But don’t despair. You can help your case and increase the odds you land the next apartment by getting a cosigner or a guarantor. Although these terms are often used interchangeably, a cosigner and guarantor are two different things.

What is a guarantor?

Who do you call when you need help? For most people, it’s a family member or close friend. A guarantor is usually in one of those categories. He or she signs up to take on the responsibility of paying your rent, rental fees or damages if you’re unable to fulfill your rental obligations. A guarantor is an outside person who signs the lease but doesn’t live with you.

What is a cosigner?

A cosigner is often a roommate who shares your living space. Your roomie signs the lease with you and becomes responsible for paying part of the rent and fees. But the cosigner can also be someone from the outside, as long as they promise to pay your rent if you can’t.

A cosigner has more financial responsibility than a guarantor since the cosigner is responsible for rent on day one. The guarantor only steps in if a renter can’t make payments. Plus, if a cosigner is a roommate, he or she has to pick up the slack if the other roommates can’t make rent.

Why would I need a guarantor or a cosigner?

Here are a few reasons you might consider getting a guarantor or cosigner:

Income is too low

When a landlord or property manager looks over your application to determine whether you can afford the rent, they often use the 40X rule (which is eerily similar to the 30 percent rule that renters should consider. It’s eerie because the numbers work out the same. But you math people knew that already.) This means that a landlord expects your gross salary to equal 40 times the monthly rent (i.e., if you earn $64,000 before taxes, you can spend $19,200 on rent, or $1,600 each month). Note that in New York City, many landlords use the rule that a tenant must earn an annual salary of 40 times the rent to qualify.

Bad credit score

According to Experian, a credit reporting agency, a score of 700 or above (out of 850) is good, 800 or above is excellent, 580 to 700 is fair and anything below 580 is poor. Most people fall between 600 and 750. Statista reports that the average credit score of renters of mid-range apartments in the U.S. was 626 in 2020.

First-time renters

Just out of school? Just got your first “real” job? Most people need help on their first rental go-’round, especially if they have little credit history for the landlord to check into.

Rent is crazy high

If you don’t think you can swing it, get a guarantor on board early on. Or, find a roommate to cosign the lease with you.

It’s required

If the landlord believes there might be trouble ahead when it comes to paying the monthly rent (based on all of the above), he or she may require a prospective tenant to have a guarantor.

Group all in over paperwork

Group all in over paperwork

Can there be more than one guarantor?

Usually, one guarantor suffices even if you’ve got a roommate. Make sure that person is aware that they’ll be financially liable for you and all the roommates.

But, if you and your roomies’ combined incomes are still close to the edge, the landlord might specify that you each need your own guarantor. If there are multiple guarantors, they’ll need their own contract to determine what happens if one of the roommates doesn’t make the rent.

Who can be a guarantor or a cosigner?

Family, friends or sometimes a colleague may be a cosigner or a guarantor. In general, landlords prefer parents as guarantors. Landlords also have stricter requirements for cosigners and guarantors than they do for prospective tenants.

For example, a guarantor has to have a high credit score (at least 700) and an income that’s a specified multiple of the monthly rent, usually 80 to 100 times (as opposed to the 40X rule for a renter.) A landlord may also request a guarantor live nearby in case the renter skips town or defaults. If the guarantor is a homeowner, that’s a plus.

Are there alternatives to getting a guarantor vs. a cosigner?

There are other ways to get support if you don’t have anyone to turn to.

  • Offer to pay several months’ rent upfront.
  • Try to sublet an apartment, rather than rent one on your own directly from a landlord. In a sublet, you rent from the tenant.
  • Find a lenient landlord, maybe one who rents a portion of a house, rather than renting in a building with a rental company on its payroll.
  • Use a company, such as The Guarantors or Insurent, which, for a fee, will help you with a guarantor and other rental services. does the same when you need a cosigner.

Choose wisely

Getting an apartment, especially in high rent towns, is stressful enough. Consider a guarantor vs. a cosigner as part of your due diligence at the start of your rental journey.

Having the discussion will be difficult so lay out your talking points beforehand. Explain the high costs of rentals and the number of other renters you’re competing with for a place to live. You may draw up a separate contract with the person defining how you will pay them if you miss rent.

Remember that asking someone to be a cosigner or guarantor will change your relationship with that person. The landlord will need all sorts of personal and financial information about the person. And, if you bug out on the rent, you’ll have to face that individual. Make sure you choose wisely and be as transparent as possible.

The hope is that you’ll only have to do this once.