How to Get a Loan Without a Guarantor

Two Parts:Obtaining Financing without a Co-SignerBuilding Your Credit

A guarantor, which also referred to as a co-signer, is a person who legally commits himself to assuming financial responsibility for loan payments in the event that a loan applicant defaults payment.[1] Guarantors are often necessary if a loan applicant has little or no credit history, or bad credit and wouldn’t otherwise qualify for financing.[2] However, in many cases, a person can get a loan without a guarantor.

Part 1
Obtaining Financing without a Co-Signer

  1. Image titled Write a Grant Proposal Step 8
    Check your credit regularly. Before you apply for any type of loan or financing, check your credit to see what your rating is. Having this information can help you negotiate the terms of loans as well as ensure that you don’t need a guarantor.
    • Order credit reports from each of the three major credit bureaus where creditors examine your score: Equifax, TransUnion and Experian. You can find these credit bureaus on the Internet, and order your credit reports either by phone or through their websites.[3] You can also order all three for free through
    • Credit scores are based on a variety of factors such as record of pill paying, total indebtedness, and credit requested.[4]
    • Scores range from 500 being the worst credit to 850 being the best. Anything before 600 can put you at risk for needing a guarantor.[5]
  2. Image titled Balance a Checkbook Step 10
    Identify and deal with issues on your credit report. Once you’ve obtained your credit reports, examine them and determine if there are any issues or misinformation on them. You need to clear up any problems before getting a loan.[6] You can deal with issues on your credit report by:
    • Paying off collections and judgments.
    • Disputing any inaccuracies that may negatively affect your credit score, because these may hinder your chances of getting a loan. You can dispute inaccuracies through each of the credit bureau websites.
    • Ensuring that there is no credit fraud or identity theft that could hurt your chances of receiving financing.[7]
  3. Image titled Apply for Child Support Step 21
    Understand the difference between a secure and unsecured loan. If your credit isn't good but you have other assets (such as property, physical equipment, or stocks), you should be able to get a secured loan. By offering up your assets as collateral, the lender can be confident he will get his money back, even if you default on the loan.[8] An unsecured loan requires you to have excellent credit or a steady, high income, as there is no guarantee (or "security") that he will get his money back if you default.[9] An unsecured loan has higher interest rates and is more difficult to obtain, as it is a riskier loan.[10]
  4. Image titled Choose the Right Divorce Lawyer Step 18
    Determine your ability to repay the loan. In order to get a loan, you must be able to prove that you can make regular and timely loan payments as well as that the loan amount you are requesting meets debt to income ratio requirements. This can help you figure out how much financing a lender may be willing to grant you as well as if you may need a guarantor to sign for the amount you’d requested.[11]
    • Loan repayment schedules are based on factors such as income, interest rates, and the repayment schedule.[12]
    • You must provide information on any income you earn and prove that it has been stable for an extended period of time.[13] Examples of monthly income include employment wages, social security, pension payments, alimony or child support payments, and rental income.[14]
    • The loan approval process involves qualifying the amount of the loan you are requesting. This helps the lender ensure your ability to make monthly loan payments that fits into a prescribed debt to income ratio.[15]
    • For example, a creditor may require that your total monthly debt obligation, including your loan payment, must not exceed 36 percent of your total monthly income. Debt to income guidelines vary per lender and loan type, so a good rule of thumb is to make sure your total debt to income ratio is 30 percent or less before you try to get a loan.[16]
    • Take into account other collateral you could provide, such as a savings account, stock, physical equipment, or other assets.
  5. Image titled Be Debt Free Step 5
    Manage your debt wisely. Keeping your debt in check can help you more readily qualify for financing without a cosigner. Simple measures can help you effectively manage your debt and avoid uncomfortable situations with lending.[17] You can manage your debt by:
    • Keeping balances on credit accounts as low as possible.
    • Paying off debt instead of switching it between several accounts.
    • Keeping unused credit cards open.
    • Only opening accounts for credit and financing that you truly need.[18]
  6. Image titled Calculate Profit Step 6
    Establish compensating factors. Besides having a good credit score and proof that you can repay a loan, you can provide lenders with other compensating factors to tip the loan approval process in your favor. This may also help you get the loan without a guarantor. Compensating factors are strengths on a loan application and can include:[19]
    • A down payment of 10% or more of the total purchase price (on secured loans).
    • Successful demonstration of the ability to pay expenses equal to or greater than the proposed monthly payment.
    • Demonstrated ability to accumulate savings and use credit wisely.
    • Documentation of compensation or income not included in effective income. This includes public benefits.
    • Proof that the loan only requires a minimal increase in monthly expenses.
    • Proof of substantial cash reserves or non-taxable income.[20]
    • Potential for increased earnings, which is indicated by training or education in the borrower’s profession.[21] The asset purchased with the loan may affect income positively, increasing your earnings.
    • You may have the option of accepting a high interest rate as compensation for weaknesses in your loan application. For example, those who purchase cars from buy-here pay-here lots often have poor credit, no guarantor and high debt to income ratios; however, they are able to get site-financed auto loans by accepting high interest rates.[22] Note that lender keeps the title and repossess collateral when necessary.
  7. Image titled Negotiate an Offer Step 8
    Apply with an appropriate lender. Companies offer many different types of services depending on the needs of their clients. Search for lenders that can best serve you and your needs, which may help ensure that you do not need a guarantor and get the best rates and loan conditions possible.
    • Set up an appointment with local banks and credit unions and ask about their loan programs and qualification guidelines. In some cases, working with local businesses can work to your benefit because they are able to work directly with you.
  8. Image titled Have a Good Job Interview Step 9
    If you work with a large, national bank or other creditor, inquire about your options for obtaining a loan through them. Having multiple accounts at one organization can help you to get the best loan conditions possible and may negate the necessity for a guarantor.
    • Search online for services that allow you to obtain feedback pertaining to the types of loan programs for which you may be able to get approval without committing yourself to any contracts.
  9. Image titled Interrogate Someone Step 9
    Maintain complete honesty. It’s absolutely vital to be as open as possible with your potential lender. Explaining your situation openly and honestly may help you get a loan without a guarantor if the company is willing to work with you.[23]
    • Some lenders are willing to bolster bad credit with alternative credit scores such as utility bills.[24]
    • Knowing falsifying information or documents can result in prosecution.

Part 2
Building Your Credit

  1. Image titled Live Within Your Means Step 22
    Pay bills on time. One of the many factors that potential lenders assess is your ability to pay. By paying other bills, such as utility or car payments, on time, you can demonstrate your ability and willingness to pay for your loan without a co-signer.[25]
    • Receive electronic reminders for bill statements.[26]
    • Set up automatic payments to come from your bank or other accounts every month.[27]
    • If you miss a payment or are unable to pay, contact your lender immediately to set up a payment schedule that will get and keep you current.[28]
    • Know that paying off a delinquent loan won’t remove it from your credit report.[29]
  2. Image titled Get a Credit Card With No Credit Step 12
    Keep credit limits balanced. Lender will examine at how close you are to maximum credit limits when assessing your credit score. Keep your credit limits well below their maximum to help you qualify for optimal lending conditions.[30]
    • Avoid maxing out credit cards or accounts.[31]
    • Pay off credit card balances each month for the best scores. Revolving balances between credit cards can harm your credit score.[32]
    • Most experts recommend keeping your used credit at no more than 30% of your total limit.[33]
  3. Image titled Get a Credit Card With No Credit Step 13
    Open accounts only as necessary. Avoid the temptation to apply for frequent credit. Only request funds that you need and that you can reasonably pay, which may also help you apply for other loans in the future.[34]
    • Lenders will examine your credit activity, including new applications, as a way to assess your need for more credit.[35]
    • Applying for a lot of credit over a short period of time can make it seem that your economic circumstances have undergone negative changes, scaring off potential lenders.[36]
  4. Image titled Get Out of Debt Step 2
    Establish a long credit history. An individual’s credit score is based on the experiences of lenders with the person over time. The longer period of time that you can establish good credit practices, including timely repayment, the more likely a lender is to assess you as a good credit risk. In turn, this can help ensure that you won’t need a guarantor or be subject to high interest rates.[37]
    • Part of establishing your long-term credit is regular review of your credit reports from the three primary agencies.
  5. Image titled Announce Your Retirement Step 1
    Recognize what can harm your score. Just as knowing how to build or re-establish credit is important to getting a loan approval, so it recognizing factors that can harm it. This may help minimize the necessity for getting a co-signer.[38] The following factors can harm your credit score:
    • Unpaid medical bills and parking tickets.
    • Heavy use of credit, even if you quickly pay it off in full.
    • Signing up for and using store credit for initial discounts.[39]
    • Charging off accounts.
    • Defaulting on a loan.
    • Filing for bankruptcy.
    • High or maxed out credit card balances.[40]


  • When it comes to paying off collections and judgments, you may be able to get creditors to settle for significantly less than your total balance by negotiating an all-cash settlement. For example, you may be able to settle a debt for up to 50 percent less than what you owe just by asking to pay the amount in 1 lump sum payment.


  • Don't forget to account for interest when figuring out your debt to income ratio.

Sources and Citations

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Categories: Mortgages and Loans