When screening new tenants, the considerations are many. Sometimes the tenant who seems to be the best fit doesn’t qualify financially. Before you show that tenant the door, you may want to explore having a cosigner on the lease to back up their finances. The cosigner does not live in the unit, but promises to repay money owed by the tenant, should the tenant fail to meet their financial obligations to the landlord. Here are a few factors to remember when thinking about accepting a cosigner on a lease:
Why does the tenant need a cosigner?
Tenants may need a cosigner for all kinds of reasons. Young adults may not have much, or any, credit history. Students or people otherwise unable to work full time may not have enough income. Some people with bad credit may be working to improve their standing, but credit scores tend to move slowly over time. There are many other scenarios that your tenant may present to you. A credit report can tell you much about the source of an applicant’s low credit score.
Would they make great tenant?
Credit and background checks are helpful indicators of good tenants. You can tell a lot about the person’s past, but must bear in mind that looking good on paper does not always translate into being a good tenant. What you ultimately want out of a tenant is someone who will abide by the rules laid out in the lease, and who will pay their rent on time and in full. Check with their employment references, former landlords, and any other references that they can provide to get a better sense of their character.
This is where a cosigner becomes critical. If you feel that the person has the desire to live in your unit and to treat it like their own home, and the cosigner will back up the tenant financially, you may feel better taking a chance on a tenant. This way, if the tenant defaults on the rent, you can still hope to collect the money you are owed.
Before you sign a lease with a cosigner, be sure to perform a credit and background check on the cosigner! When writing your lease through ezLandlordForms, we have a place for all of the pertinent information about your tenant’s cosigner. Having a cosigner can give you the confidence to give a tenant with poor or little credit a chance to be a great tenant!
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