Guarantor Definition & Types?

1. What is a guarantor?

A guarantor is a person who pledges to be responsible for the debt of someone else.  In most cases, this person will agree to pay off the debt if the borrower is unable or unwilling to do so.

2. Who needs a guarantor?

People who cannot afford to pay for their living costs.  People who don’t have a job. People who are not Korean national and doesn’t earn enough income from working in Korea or abroad. People with a bad credit history, low credit score, bankruptcy records, etc.

3. Is there a guarantor for everyone?

No.  There are many circumstances where one cannot get a guarantor, such as if you are underage.  If the creditor finds out the guarantor cannot afford to pay for your debt they can sue you both.

4. How to get a guarantor?

If you have a friend or family member who is a Korean national and has a good credit score, he/she will be able to become your guarantor easily.

5. The benefits of having a guarantor?

A guarantor is able to decrease the interest rate in Korea.  If you lose your job or get into an accident that makes it impossible for you to work, the guarantor will be obligated to cover the debt until the borrower can repay it.

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6. The disadvantages of having a guarantor?

There are several disadvantages of having a guarantor:

They can sue you if your debt is not paid back by you.

The guarantor’s credit score will be affected as well as yours.

7. What are common types of guarantors?

There are many types of guarantors:

Parents, spouses, siblings, Korean national friends, Korean companies, etc.

8. What are the common types of guarantors for foreigners?

If you have a Korean friend or family member who gives you money on a regular basis to cover your everyday living costs, they can easily become your guarantor since they will know more about your financial situation than anyone else.    If you have a Korean national friend with a good credit score and is willing to help you, they can also become your guarantor.  It isn’t difficult for foreigners to find someone who will be their guarantor as most family members, friends, or people related to them easily do so.

9. Tips before getting a guarantor?

There are two tips before getting a guarantor:

1) Before applying to ask someone to become your guarantor, carefully consider if they can afford to pay off any future debts.  

2) Only borrow what you need and limit debt. The less debt you have, the more likely it is that your guarantor will not be bothered by your debts.

10. Conclusion

A guarantor can protect you from any future financial problems and help you get a housing lease contract in Korea.  However, if handled poorly or irresponsibly, guarantors can suffer adverse credit consequences.  So please be careful and think carefully about the pros and cons before getting a guarantor and signing a contract with them.

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