Can I get a guarantor loan if I have bad credit?

Having bad credit is a common reason borrowers seek out a guarantor when applying for a personal loan. If both you and your guarantor have bad credit scores you'll struggle to get the loan approved. You could also look at a personal loan for bad credit borrowers.

What checks are done on a guarantor?

Lenders require ID to establish the guarantor is an Australian citizen or resident over the age of 18. Then the lender checks the guarantor's credit report in the same way it checks the applicant's credit report. It also assesses the guarantor's ability to repay the personal loan. This includes looking at their income and spending, plus their current outstanding debts. If the loan is secured by an asset provided by the guarantor, then the lender will also examine the asset to make sure it's suitable collateral.

What do I do if I can't get a guarantor?

If you can't find someone to guarantee your loan then you could: Look for a loan from a different lender (who may charge you a higher interest rate). Put off the loan application until your credit and financial position are stronger. Consider borrowing a smaller amount of money.

Why can't I get a guarantor loan?

Having a guarantor doesn't always mean you can definitely get a loan approved. If your credit is in really bad shape, or both you and your would-be guarantor are not ideal borrowers, your application may be rejected. You might get rejected if you're trying to borrow too much relative to your income and expenses.

How easy is it to get a guarantor loan?

Assuming you're borrowing a reasonable amount and your guarantor has a good credit history and/or an asset to back up your application, having a guarantor should make it easier for you to get the loan approved.

Do guarantor loans affect the cost of the loan?

Having a guarantor attached to your loan won't make the loan more expensive in terms of the rate and fees. In fact, you can possibly get a better interest rate because having a guarantor makes you a safer borrower from the lender's point of view.

Richard Whitten

Senior Money Editor

Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience covering home loans, credit cards and personal finance. He has written for leading finance publications like Yahoo Finance, Money Magazine and Homely, and his expert insights are frequently featured in top media outlets such as the Herald Sun, REA, and news.com.au. He also provides expert commentary on television and radio shows nationwide, helping Australians navigate the complexities of mortgages and property ownership.
Richard has a Graduate Certificate in Communications from Deakin University and a Bachelor’s degree in Education from the University of Sydney. He is also fully certified in mortgage broking and finance, holding a Certificate IV in Mortgage Broking (RG 206), as well as Tier 1 Generic Knowledge certification and Tier 2 General Advice Deposit Products RG 146 certifications, which comply with the Australian Securities and Investments Commission (ASIC) standards for finance professionals. As a homeowner, he also has firsthand experience of the ins and outs of the mortgage process.
If you’re interested in a media interview with Richard, please reach out to our PR team at aupr@finder.com.