Cosigners are a mystery for many landlords. “Why would I take on two payees when I can take on one?” A fair question no doubt. Oftentimes, it doesn’t make sense to take on a cosigner. If you have two excellent candidates for your rental, one with a great financial history and another that makes you shudder, there’s no reason to jump into the flames and hope for the best.

So when should you accept a cosigner on a lease? Probably only when the potential tenant is a great candidate that is hurting just a little in the financial security section of your free credit screening. Students are a common one. Really, young people in general. Depending on where your property is located, a cosigner may be the ticket to getting your space occupied quickly with a solid safeguard.

Making sense of income levels and credit scores

Back in the day, 30% of rent was the general rule of thumb for how much of a person’s income should be spent on rent. Well, the times they are a changin’. That number is still a great goal, but for 47 percent of Torontonians, that is not yet a reality. With that in mind, it’s worth thinking about what actually is an acceptable level of income for a rental, and when a cosigner should be considered.

Credit scores show us someone’s history. Are they consistently able to make their payments and pay back creditors? It serves as a marker, but it should be taken into context with an applicant’s income.

Here’s what we’re getting at: if an applicant seems ideal, but they are a bit under what would be an ideal income level, their credit score can reassure landlords that they are reliable in making payments. That said, you’re still better off with NaborlyShield to take your fears away.

Stacked coins

So why would I take a cosigner?

Let’s say you live near a college or university. Many of your applicants have little to no income and a non-existent credit history. What do you do? Well, don’t launch into a diatribe about how tough you had it back in the day. Instead, consider accepting a cosigner on their lease.

This way, if they blow their student loan on a new car and takeout, you have another point of contact that is liable to pay the rent owed.

Now there are some conditions here. Not every situation is ripe for adding a creditor. It’s going to add extra steps to your process and can still be massively frustrating to work through if your tenant is unable to pay rent. You’re still going to want to be confident in your choice of tenant, especially since the average eviction takes 75 days to complete in Ontario.

How do you gain that confidence? Not by playing Russian roulette with your tenant applications. Instead, sign up for our free tenant screening—it’s got that magic AI power to give you better results time and time again.

Steps to take when accepting a cosigner.

You’re going to want to be extra judicious here, especially since you’re already taking on a bit of risk with a tenant whose financial security is debatable at best.

  1. Do your research on the cosigner Start off by taking a look into their credit history. Understand their relationship with the prospective tenant. Ensure they are able and willing to make payments if the tenant is unable to. Some cosigners don’t really know what they’re signing on for.

  2. Confirm you can contact the cosigner That’s right. You want multiple points of contact with the cosigner. Are they going to leave for a holiday conveniently when the tenant fails to pay rent or damages the property? We sure hope not. Better to be safe than sorry.

  3. Go through the contract with the cosigner Point out each liability the cosigner is taking on. This shouldn’t be a painful experience for anyone—it’s valuable knowledge and essential to getting your payments.

We would be remiss if we didn’t mention NaborlyShield here. For a fraction of your rental income, we’ll ensure you’re paid on-time, every time. And if the tenant is being problematic, we’ll even handle the eviction. Forget dealing with 75 days of frustration (the average timeline for Ontario evictions). Instead, get out there and find yourself a better tenant.

So that’s it. If you’re unsure of a candidate, wait to find a better one. If you’d rather not wait, sign on to NaborlyShield and forget the worries.