On a lease, a guarantor is a third party — often a parent, relative or close friend — who signs a separate agreement or a lease addendum promising to cover the tenant’s rent and related costs — including the cost of breaking a lease — if the tenant stops paying rent. Unlike the tenant, a guarantor usually doesn’t have the right to live in or use the rental. Their obligation generally lasts for as long as the lease term does, including renewals, unless the agreement says otherwise.

Landlords may ask for a guarantor when an applicant’s credit history is thin or troubled, their income doesn’t clearly cover the rent or they don’t have a rental history to review — common circumstances for students, recent graduates or people relocating for a new job. A guarantor gives the landlord added confidence that rent will be paid even if the tenant runs into a financial setback.

Some landlords also require renters insurance to help them protect their business. Renters insurance helps tenants cover costs if their belongings are damaged or stolen or if they’re liable for another person’s injury or loss. It also can help the landlord, by making sure their tenants can cover their own costs. Requiring a guarantor for higher-risk applicants is another way landlords try to protect their rental income when taking on a new tenant.

The terms guarantor and co-signer are sometimes used interchangeably, but when it comes to rental leases, they typically describe different roles.

A guarantor’s responsibility generally kicks in only if the tenant fails to pay, while a co-signer is typically bound by the lease from day one, alongside the tenant. Because a co-signer also occupies the unit, they usually have the same rights as any other tenant, including being listed on the lease and having access to the property. A guarantor does not.

Landlords may prefer a guarantor when they want an added financial safety net without adding an occupant to the lease — for example, when a parent is helping a student rent an apartment. A co-signer arrangement may be preferred when multiple people plan to share a rental and share responsibility for it directly, such as roommates who all want their names on the lease.

Landlords often use consumer reports — commonly called tenant screening reports — to evaluate both tenants and guarantors before approving a lease. According to the Federal Trade Commission, these reports can include credit history, rental history and, in some cases, criminal history, and they’re prepared by companies called consumer reporting agencies.

Under the federal Fair Credit Reporting Act, a landlord generally needs a valid reason — such as evaluating a rental application — to pull a consumer report, and applicants and guarantors are typically asked to provide written permission first. If a landlord denies an application, increases the deposit or takes another adverse action based even partly on information in a screening report, the FTC notes that landlords are required to notify the applicant or guarantor.