If I agree to be a guarantor could my creditworthiness be affected?

Dear James,

I have been asked to be a guarantor for a family member. I'm sure they will make their payments. My question is does the loan amount show on my credit file and does it count as my debt and will it effect my chances of applying for credit? Is this debt (although not mine unless payment is failed) taken into consideration when lenders decide if to lend me money.

Anna, London

Dear Anna,

When you guarantee a credit agreement you are taking on a degree of responsibility for the debt, but not in quite the same way as entering a joint credit agreement. While the terms and conditions of guarantor agreements can vary, we wouldn’t expect to see a record of the agreement on the guarantor’s credit report (as would be the case with a joint account), unless of course the agreement defaulted. In that case, you may well see a default registered on your credit report too and, if payment was still not forthcoming, perhaps a county court judgment as well. So, as long as the family member pays the agreement on time every month – which I’m sure they will! – the debt will not show on your credit report and should, as a result, have no bearing on your own credit rating. (March 2012)


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