Alternative Options to a Securing a Personal Cosigner
Perhaps you need a car loan in order to get to work, and although you know you’ll be able to make all the payments, you don’t have enough of an income or your credit score is too low in order to obtain one. Or perhaps you want to rent an apartment right out of college, but don’t have a steady income yet. A co-signer can solve any problem you have with getting a loan or lease. That being said, it’s reasonable that you don’t want to compromise your loved one by asking him or her to co-sign. Otherwise, you may simply not be able to find anyone whose willing to co-sign for you. Whatever the reason, there are some alternatives to finding a co-signer that will allow you to still obtain a loan or lease without asking anyone to co-sign for you.
Become a Roommate or Subtenant
If you are attempting to lease an apartment then you should consider finding a rent situation in which there is a person who is obligated to pay the rent, but is searching for someone to help them pay it. For example, you may be able to sublease an apartment from someone who had to move unexpectedly or who is traveling for a certain period of time. Ensure that you ask the person you are subletting a room with to give you a copy of the lease in order to ensure that you aren’t violating the contract by them allowing you to move in.
Utilize a Co-Signer Service
In order to obtain a loan or secure an apartment, you have the option of using a co-signer service. If you’re willing to pay a fee, a third party will guarantee to a lender or a landlord that they will repay your loan or your rent if you’re unable to do so on time. However, keep in mind that you must be approved by the co-signer service, and that the fee will be a certain percentage of your rent or loan, and typically is a nonrefundable, one-time fee.
Use a Lending Club or Prosper
If you need to borrow a sum of money and no traditional lender is willing to lend to you, then looking into peer-to-peer lending may be a better option. The two biggest companies that allow for peer-to-peer lending are Lending Club and Prosper. Both of these companies will look at your credit score when applying, however they don’t require that you have a perfect score. Additionally, you can use the money that you borrow for any purpose. The lower your credit score, the higher your interest rate will be, and there’s a chance you may not be accepted. However, it’s worth trying to apply in order to find out.
Rebuild or Establish Your Credit Score
Lenders will require you to have a co-signer if you have a damaged credit score or no score at all. However, you can work to re-establish a good credit report by using a secured credit card that will increase your credit score the more you properly use it. All you have to do is make a few purchases every month on the credit card and then repay it before your credit card bill is due. If your issue is that you don’t have established credit then know that within six months of starting to use your secured credit card, you will meet two criteria for having a great credit score—history of on time payment and low credit utilization ratio.
The Bottom Line
It is extremely frustrating to not be able to take out a loan or rent without a co-signer, however keep in mind that doing these things is a privilege not a right, and landlords and lenders must look at your financial history for their financial safety. If you’re unable to obtain a co-signer, or don’t want to use one then remember that you have other options.