February 18, 2026 · 4 mins read
Santosh Kumar
It’s a heavy financial decision to agree to be a loan guarantor. Too many well-meaning individuals agree to be guarantors for relatives or friends without really comprehending the ramifications. A typical worry is if a borrower’s default can impact the guarantor’s credit profile. In India, being a guarantor connects your financial reputation to the borrower’s repayment behaviour, so any default can affect your own credit score.
Knowing how guarantor liability functions and how it impacts your credit history can help you make informed financial decisions.
A guarantor is someone who promises to repay a loan if the borrower does not. Lenders typically ask for a guarantor if the borrower is young with limited credit history, has less income stability or a less strong credit profile.
When you are a guarantor, the loan is recorded in your credit profile as a potential liability. Credit bureaus like TransUnion CIBIL can put it on your credit report. While you might not make monthly payments, your credit is linked to the borrower’s repayment habits.
Also Read: What is UPI Collect?
If the borrower misses EMIs or defaults, the lender can report that delinquency to credit bureaus. Because you’re on the hook for the loan, this bad repayment habit can also show up in your credit report.
A borrower default can decrease your credit score as it indicates higher financial risk. Plus, lenders looking at your credit profile will consider you financially vulnerable because it’s your responsibility to repay the loan whenever.
How much it hurts your credit score depends on the length of the default, the loan balance and your credit history. If you have a robust credit history, the effect might be moderate but getting in the habit of defaulting or defaulting for extended periods of time can punish your score severely.
Also Read: Are UPI PIN and MPIN the Same
A guarantor is on the hook for the loan if you default. If the borrower defaults, the lender can come after you. If you don’t, they can continue to make negative reports on your credit history. If the guarantor doesn’t repay either, it can go into default or become a non-performing asset. This can significantly damage the guarantor’s credit score and limit future loan opportunities.
Just cosigning doesn’t lower your credit score. As long as the borrower pays on time and has a good repayment history, your credit profile is not impacted.
But the loan may still be reported on your credit report as a liability, which can impact your borrowing power. Your lenders looking at your loan application will factor in the guaranteed loan when determining your exposure.
Also Read: Best Credit Cards for Shopping at Amazon & Flipkart
Just becoming a guarantor doesn’t lower your credit score. As long as the borrower pays on time and keeps a good repayment record, your credit profile is not impacted.
But the loan can still show in your credit report as a liability, which impacts your borrowing power. Lenders checking out your loan application could potentially include the guaranteed loan in their calculation of your total exposure.
The danger exists merely in the event the borrower postpones payments or defaults.
Also Read: What is Virtual Credit Cards & Physical Cards
Becoming a guarantor does not affect your CIBIL score unless the borrower makes any payment defaults or late payments.
Yes, the loan could show on your credit history as a contingent liability and will be factored into lenders decisions for your lending.
Being removed as a guarantor is difficult and subject to approval by the lender. Lender will only approve removal if the lender is satisfied that the borrower has an acceptable alternate person who agrees to be a guarantor or that the borrower meets the lenders own loan qualifications
Build and Maintain a 750+ Credit Score
