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CURRENT | May 2022 SCREENING
Considering a Guarantor While Screening Applicants? Chartrice Young | Screening Director | cyoung@RHAwa.org | (206) 905-0605
In this post-pandemic phase, many rental housing providers are asking how they are going to continue to find responsible individuals to pay rent and maintain the property.
Here are some examples for when a guarantor could be requested: • Non-U.S. resident or international student (i.e., no FICO score) - (some rental housing providers may accept your internaMany of your applicants tional credit history.) might be students or indi• Low credit score. viduals who are coming out • Limited available Chartrice Young of a financial crisis. They funds or lack of consistent may not be able to meet the housing employment income. providers screening criteria require• Unconventional source of income ments when it comes to the rent to (i.e., non-liquid). income ratio. In these cases, you may • Perceived failure to meet the qualirequire the applicant finds a guarantor. fication requirements but the abiliThe applicants may also come to you ty to fulfill rent obligations and ask if you’re willing to accept a guarantor or also known as a co-signer. The housing providers screening criteria generally will state the income A guarantor is an individual that is firequirements for the applicants to denancially stable enough to help take on termine if they will meet the income the financial responsibility of another qualifications. individual in the event they default. Guarantors help cover the cost of the Income Requirement: rent during the tenancy if the tenant is When checking for sufficient income, not able to. They also can be held remost rental housing providers only use sponsible for any financial obligation verifiable garnishable wages or governin the event of an eviction. ment and/or charity program vouchers or government issued payments. TypiIf you screen an applicant and see they cally, an income to rent ratio of 3:1 is do not meet your criteria, if you are common (i.e., rent should not exceed willing you can offer them the oppor33% of gross income). Some housing providers choose to require a flat, tunity to obtain a guarantor. When it is monthly income in lieu of using an indecided to screen a guarantor/co-signcome to rent ratio. Some lower income er you will need to fill out and provide properties set this at 2.5:1, while higheach of the applicants with an Adverse er end homes often require a 4:1 ratio. Action Notice per the RCW.59.18.257 Debt to Income ratio should not exceed and use it to approve them with con20% of the applicants’ income. ditions. The condition you will state is the use of a guarantor. The guarantor should be able to exceed the income requirements section A few perks to having a guarantor are of your minimum screening criteria. they give the housing provider assurKeep in mind your guarantor should ance that if the tenants can’t pay the be someone financially stable enough rent, their guarantor will step in and to meet all their financial responsibilimake the rent payment. The guarantor ties plus help your applicant if or when is the responsible party that agrees to needed. “take on,” or assume the financial obligations that are set forth within the A guarantor may add additional assurlease. They do not reside in the rental ance not only for your prospective tenunit. ants but for you as a housing provider.
They add a bit of protection as a credit-worthy third party without having to worry about the renter’s inability to pay their rent due to unforeseen financial pressures. When you or your applicant(s) ask about a co-signer/guarantor, you will want to screen the guarantor to decide that they are able to meet your screening criteria’s income requirements. Either have them fill out an online application or give them a hard copy application. If your RHAWA Membership is Certified to receive credit, be sure to screen them with the Basic Screening package. This package will provide you their full credit report, which includes their credit score, credit history and public records, for example a bankruptcy or court ordered child support. Once you have determined that your prospective tenant’s guarantor meets the financial qualifications and you decide to approve the prospective tenant, the next step is the lease. The guaran-
tor does not sign the lease but instead you will have the guarantor complete the Guarantor Addendum form which is in RHAWA’s Forms Library. The Guarantor Addendum explains in detail their responsibility. If you have further questions, please contact RHAWA Screening Department or Support Center. Disclaimer: This article contains general information and is not intended to apply to any specific situation. If you need legal advice or have questions about the application of the law in a particular matter, you should consult an attorney.
