Acting as Guarantor on a loan will it affect credit rating

[Liveinthepresent]

I have agreed to act as a guarantor for a relative in a pickle trying to finance essential equipment for a small business.
I know I would be liable in case of default and am not too scared about that as between me and other family we could sort the amount out.
My concern now is that,they have credit searched me and DH suddenly asked me if it would show me in any negative light if this happened a or would it link me to the small business ..
Not sure how these things work and we are Hoping to remortgage in a few months.
Thanks if anyone knows anything about it.

If you're standing as a guarantor then you are liable if the relative defaults. That liability will affect your credit rating because it's an existing financial commitment that has to be taken into account when considering you for more borrowing. How much it'll be affected probably depends on how big the loan is.

Should have said.... it's not going to affect your credit score as much as if, say, you'd taken out a joint loan with your relative. Therefore, your relative had better make sure they keep up the payments because, if they default, you really would have problems getting credit.

So in other words you think it would count as if it were my own credit liability ?
I understand that I am liable if it goes wrong and that's ok I don't think there is much of a risk but I have just been told by an IFA that when we remortgage any existing borrowing would be deducted from the amount we can obtain -'so if this would count that it very bad news.. Especially as I already said yes!

I'm surprised if an IFA has said that but the rules for lending are much tighter than they used to be.

I recently acted for a client in a house purchase with a mortgage from a mainstream lender where the amount of the loan she had guaranteed was taken into account to reduce the mortgage available to her She had to switch to a cheaper flat

Oh no ! Not what I wanted to hear Ran but it backs up what the IFA said. Not much I can do about it now but useful to know as I was asked in far too casual a way really..

Somebody asked us to do this years ago. I didn't see the harm. But DH said no and it was his friend so I went along with his decision. I'm glad we did now. It's not really something to be recommended IMHO.