A question about renting and bad credit...

ChasingButterflies

Hi,

This is probably going to sound like a really daft question - but I have looked on shelters website and can't really see any info.

The situation that we are in is that my Mum's home is being reposessed in the next week... Luckily we have enough room to take her in for a while, however it can't be a long term solution. (I am hoping that staying here will give her the opportunity to sort out her unsecured debts as she will have no outgoingings while staying here)

So at some point in the future my Mum will need to rent a property, she is on a good salary however put bluntly is terrible with money and her credit history, well.... it is going to be totally shot.

My question is I am presuming that a potential LL would need/want a gaurntor (sp?) So are there any guidelines for how being a garuntor works? i.e. I am presuming we would need to sign something to say that we would pay in the event of Mum not? Or would we need to "prove" anything other than a credit check?

Any help is much appreciated.

mlz1413

You're right that most LL/LA want a credit check done and a low score will put most off. Yes you can be a guarantor I think this is normally a standard form that you can be given at the same time as your Mum fills in her application.

Please remember that as guarantor you are responsible for any debts, as in unpaid rent, damage to the property, unpaid utilities etc and if your mum is that bad then you will need to be prepared to pay out.

BUT if your mum stays with you and pays off her debts then her credit score should be much better than it is currently. If you are sure your mum will pay these debts then you could offer to loan her the money now pay everything off and then when she has paid you back in full she will have had a 'good' credit history for xx amount of months - you need to be postive she won't go out and get more store/credit cards and that you will be paid.

The other way and maybe the best way is that your mum saves up 6 months rent plus a deposit and offers to pay her minimum AST upfront, then if she always saves her rent she will have another 6 months lump sum to pay for the next AST period.

ChasingButterflies

mlz1413 wrote: »

You're right that most LL/LA want a credit check done and a low score will put most off. Yes you can be a guarantor I think this is normally a standard form that you can be given at the same time as your Mum fills in her application. Thanks, I had no idea at all how it would work.

Please remember that as guarantor you are responsible for any debts, as in unpaid rent, damage to the property, unpaid utilities etc and if your mum is that bad then you will need to be prepared to pay out. I am hoping that we can get her interested in a small 2 bed place - the rent is around £450pcm in an ok area... It should suit her needs, but sometimes that doesn't always come into it...

BUT if your mum stays with you and pays off her debts then her credit score should be much better than it is currently. That was my thinking she has a large OD and CC bill. The OD incurrs charges and if she can get it back into the black on that then that should help day to day. If you are sure your mum will pay these debts then you could offer to loan her the money now pay everything off and then when she has paid you back in full she will have had a 'good' credit history for xx amount of months - you need to be postive she won't go out and get more store/credit cards and that you will be paid. tbh we have already lent her a substantial sum of money I don't expect to see it returned she has the best of intentions but something always happens and then she just seems to forget

The other way and maybe the best way is that your mum saves up 6 months rent plus a deposit and offers to pay her minimum AST upfront, then if she always saves her rent she will have another 6 months lump sum to pay for the next AST period. This is a good idea - which would really work well if we could get her interested in a smaller (then she is used to) place

tbh I need to be clear how things are going to "work" It would be very easy for her just to stay and have no plan for how she is going to move on from this. The problem is you can lead a horse to water...

Thank you so much for taking the time to reply - my head is still in a bit of a spin over the whole situation.

mlz1413

There used to be a guy called Alvin Hall (pre runner to Martin) and I will always remember a story he told about his brother. His brother had debts and ended up going home to mum, his mum told him he had one year to sort himself out. The brother said ok, but fell back into being a teenager with mum cooking dinners, washing and ironing. So it came as a huge shock when on the day of the one year being up he got home to all his stuff in black bags in the hall and his key taken back off him. Apparently it was the best thing his mum had ever done for him, it made him face facts.

I think you have to decide what is best for you and stick to it - very hard as I had my mum live with me for 2 years instead of 6 months (different circumstances) so I know the emotional pull. But it is your life and your house so you make the rules and you stick to them.

The rules could include:
you can be here for one year
you pay me £200pm rent I will do all the shopping and cooking.
Ask her if she would prefer to pay you more every month and you will take the responsiblities of going and paying the bills, if not make it plain that she is living with you to re-pay her debts and not for any other reason.

Its best to make things clear at the beginning or you will be rail roaded.

Good Luck

mrs_deadline

Very good sense from mlz1413. All I would add is, please think twice about agreeing to be a guarantor after the time is up, in case you end up regretting it. It's much better for everyone if she finds somewhere she can rent based on her own salary and credit rating, however difficult it is to find such a place initially.

When you sign as guarantor for someone you think it's just a formality to get the tenancy, but it's a very open-ended liability and difficult if not impossible for you to get out of. You have to be very confident that the person you're signing for will definitely manage their finances responsibly, otherwise you'll need deep pockets.

ChasingButterflies

I do fully understand that if Mum were to fail to pay that we would be liable, and I would not have an issue with paying any rent etc if Mum failed to pay (nobody else should be out of pocket and I would feel terrible if they were)

I think I like the idea of the upfront 6 months rent and looking at the pcm figure it would be the equivilant of just over a months (of Mums) salary after tax so I guess that is one months stay put to good use!

We have on many occasions offered to help her sort through her finances but she only seems willing to ask for money when she is in a state - although I didn't think she would be able to rent somewhere without us becoming a garuntor.

mzl - I do understand the point of the story - I guess I just feel that she won't take it well if I say that she can stay here for x amount of time as long as she sorts herself out. If I say nothing then you are right I will be rail-roaded so a list of ground rules will be needed. At the end of the day though it isn't just mum and I to consider there is DH and our little people - it will make a huge difference to their homelife. Whatever I do it feels like I am being disloyal to someone.

Mrs Deadline - I would hope that in the time Mum is with us I will be able to see how well she is managing her money clearing her debts (I don't even want to think about what happens when her house is sold and they figure out how much she still owes them - not yet anyway) If she continues the way she has to date then I guess what you have said is right and I shouldn't sign anything. I really hope that it doesn't come to that though.

Thank you both - I just needed to hear someone else say what I was thinking (but felt guilty about)

mlz1413

HI ChasingButterflies, hope you have sorted some stuff out over the weekend but just some thoughts on your last post - Can you get DH to be the one who talks to your Mum? This makes it more of a business arrangement than a mercy mission, is he also more likely to stand up to your Mum asking unreasonable requests?

As is it your home and your families home your Mum needs to be aware that you are making a big scarific for her irresponsible spending. Maybe working out what the alternatives are will help you stay focused - ie if you didn't put your Mum up is there anyone else she could stay with? Would she be faced with B&B homeless accomodation?

Any way Good Luck!

robpw2

try private landlords most tend not to do a credit check but instead they will base it on references etc

huntersc

Sorry, it's bugging me, its a guarantor.

I became a guarantor for my little brother once, that was a bad move Your mum should be responsible enough to understand that you're liable for her action or inaction so hopefully it won't come to a point where you're having to pay out for rent etc.

Kimitatsu

robpw2 wrote: »

try private landlords most tend not to do a credit check but instead they will base it on references etc

A lot of private landlords do run a credit check now, they can do it through their solicitors along with the tenancy agreement being drawn up.

Chasing butterflies, you could also speak to your local council and see if she would be eligible for any help from the local housing dept. As her home is being reposessed she will probably be have been deemed as making herself intentionally homeless but it may also be that she falls into a "vulnerable" group because of her age. It is certainly worth the price of a phone call.

Good luck with whatever you decide.