What is a Cosigner and Why You Should Consider Using Them

Cosigners and Nomad

Cosigners are an excellent tool to mitigate risk in the management of your rental property. Nomad encourages the use of cosigners in order to allow us to offer you a larger tenant pool, while still enabling us to guarantee rent on your property. Cosigners assume responsibility for both the monthly rent and any damage at the property, giving you an increased sense of security with the tenants that you choose.

Why does Nomad require cosigners for certain residents but not others?

Nomad requires a cosigner when a resident group’s credit score shows increased risk. Nomad uses multiple data points like income, credit, and eviction history to determine the risk of each applicant group.  When Nomad determines that a resident group has increased risk, Nomad may require the resident group to either provide a cosigner or a Cosigner Alternative Fee.

What does it mean for a landlord to consider accepting a cosigner?

A cosigner represents a safety net for landlords, providing assurance in cases where residents may fall short on rent payments or incur damages beyond their means to cover. Essentially, the cosigner steps in to fulfill financial obligations should the primary residents fail to do so. This arrangement greatly mitigates risk for landlords, increasing your potential pool of residents, especially those lacking a solid rental history.

Cosigners are often needed when someone has a limited credit history or has faced past financial hardships damaging their credit. While these are indicators of increased risk, a cosigner helps to greatly mitigate this risk.

What responsibilities does a cosigner undertake?

By agreeing to cosign, an individual assumes the same financial responsibilities as the primary resident, regardless of whether they reside in the property. This includes obligations such as covering deposits, damages, rent payments, overdue rent, and any other expenses stipulated in the rental agreement.

If multiple residents are involved and a cosigner is party to the lease, they will be held accountable for the entire lease. For example, if a parent cosigns for their child's lease alongside their child's friends, they would be liable for damages or missed rent payments incurred by those friends.

Similarly, if damage were to happen at the property that exceeds the security deposit amount – the cosigner would be held responsible along with the residents to pay for additional damages.

What is Nomad’s requirement for a Cosigner?

Nomad’s cosigners are required to have a 700+ credit score. Cosigners have the incentive to pay in the event the property’s residents do not, because they do not want to damage their stellar credit score.

What about Nomad’s Cosigner Alternative Fee?

While some higher risk residents will be required to provide a cosigner, some lower risk residents will be offered the option to pay a Cosigner Alternative Fee in lieu of providing a cosigner. These residents pay a fee to Nomad to offset their risk of potentially going delinquent which allows Nomad to feel comfortable guaranteeing the resident’s risk. 

How rigorous is Nomad’s screening criteria?

Nomad seeks to strike a balance between mitigating risk and getting your property leased quickly. Remember, Nomad stands behind all residents that we determine are eligible, which allows us to guarantee their rent.

Nomad supports thousands of properties and has screened over 10,000 residents. We have continuously revised our criteria to allow us to make eligibility decisions quickly, while mitigating risk for you and Nomad. Cosigners are one tool that we use to make sure we can provide Guaranteed Rent to you, while finding you a great resident quickly!