DEFINITION of 'Guarantor'

A person who guarantees to pay for someone else's debt if he or she should default on a loan obligation. A guarantor acts as a co-signor of sorts, in that they pledge their own assets or services if a situation arises in which the original debtor cannot perform their obligations.


Usually, people or businesses with poor or limited credit history can only get a loan if they have a guarantor. For example, an individual with a comparatively low credit score looking to obtain a line of credit to cover unforeseen expenses may be required by the bank to find a guarantor before the bank will issue them the line of credit.

  1. Credit Rating

    An assessment of the credit worthiness of a borrower in general ...
  2. Completion Bond

    A financial contract that insures a given project will be completed ...
  3. Creditor

    An entity (person or institution) that extends credit by giving ...
  4. Default

    1. The failure to promptly pay interest or principal when due. ...
  5. Loan

    The act of giving money, property or other material goods to ...
  6. Impaired Credit

    A deterioration in the creditworthiness of an individual or entity. ...
Related Articles
  1. Credit & Loans

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  2. Credit & Loans

    Avoid The Generation Debt Trap

    There is a worldwide generation of young, educated individuals mired in unmanageable debt. Find out why.
  3. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  4. Investing

    Debt Reckoning

    Learn about debt ratios and how to use them to assess a company's financial health. You could save a lot of money!
  5. Options & Futures

    Borrowing Smart In A Debt-Filled World

    Leveraging your money can have many perks, but it's not always the smartest financial plan.
  6. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  7. Entrepreneurship

    How Pawnshops Make Money

    Learn about the various ways that a pawn shop makes money, including the primary revenue sources of making personal loans and selling retail items.
  8. Credit & Loans

    Have Bad Credit? 6 Ways to a Personal Loan Anyway

    It'll cost you more, but borrowing is definitely doable. Here's how to proceed.
  9. Credit & Loans

    Personal Loan Rates: 6 Ways to Find the Best Deals

    Terms can vary tremendously, so you better shop around, both in person and online.
  10. Credit & Loans

    Personal Loans: Compare the 6 Biggest Banks

    Need a personal loan? You may stop by one of these big banks for help. Their offerings vary in size, rates and loan types, which means you have options.
  1. How do standby letters of credit help facilitate international trade?

    The nature of international trade inherently creates significant exposure to counterparty risk for those involved. Two parties ... Read Full Answer >>
  2. How are my cosigners affected if I file bankruptcy?

    Cosigners assume the responsibility to pay for another individual's debt in the event of a default, and that responsibility ... Read Full Answer >>
  3. Are secured personal loans better than unsecured loans?

    Secured loans are better for the borrower than unsecured loans because the loan terms are more agreeable. Often, the interest ... Read Full Answer >>
  4. Can personal loans be included in bankruptcy?

    Personal loans from friends, family and employers fall under common categories of debt that can be discharged in the case ... Read Full Answer >>
  5. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  6. Are personal loans bad for your credit score?

    Taking out a personal loan is not bad for your credit score in and of itself. However, there are several factors that come ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center