Many business owners who operate their businesses independently from any employer find themselves struggling to obtain financing from traditional lenders due to the unique circumstances associated with self-employment.
But there is hope.
Here are some ways that can increase your chances of being approved for a self-employed loan and get on track with meeting your financial goals.
Get your credit report in shape before applying
Your credit score is crucial measurement lenders use to determine if they can trust you with a personal loan. Increase your chance of approval by taking the time to ensure your report looks impeccable before submitting an application.
A few steps such as reviewing inaccuracies, monitoring changes, and paying off any debts on time will help pave the way toward better financial opportunities.
- Check your credit report for errors: Errors in your credit report can have unexpected consequences, like loan denials. Ensure you’ll be prepared when applying for a loan; check up on it at least 30 days ahead of time and pay close attention to any updates throughout the application process! After all, as many as 1 out of every 5 reports contain errors that could stand between you and approval.
- Paying down debt and keeping credit card balances low is essential to improving your financial reputation. A great way to do this is by paying off any outstanding debts you have, as it will improve your credit utilization ratio; the amount of available vs used credit affects how attractive borrower lenders view you as being.
- Pay dues on time: Having a pristine track record is key when applying for a personal loan. Make sure you pay all your bills before their due date.
- Resist the urge to apply for various new credit: When you’re in the market for a loan or credit card, it pays to be cautious of hard inquiries. These will appear on your report and take two years to leave; too many can have an undesirable effect on your score that could put lenders off extending their offers. However, requesting quotes from those who conduct “soft inquiries,” won’t influence either your report or score – allowing you to shop around with peace of mind.
Stick with your job and keep your income steady
Income stability is an important consideration when applying for a loan. Lenders will look at your income to make sure you have the financial means to pay back what you owe, and they prefer that it comes from a reliable source like regular employment over time.
Keep in mind that any sudden changes or drops before approval may impede the process. Plan ahead so lenders feel confident about your ability to repay responsibly.
Choose a lender that’s well-matched for you
Finding the lender who’s perfect for you isn’t always easy, but it is possible! While some lenders specialize in borrowers with spotless credit profiles and can be quite exclusive when granting loans, many others are willing to look beyond a person’s credit score.
Researching online reviews or visiting a potential lender’s website could give you a better understanding of their approval requirements so that your loan application doesn’t get denied unnecessarily.
With the right search effort – plus knowledge about yourself and what kind of borrower you are – finding an appropriate lending match should become much simpler.
Don’t apply for a larger loan than you need
When it comes to taking out a loan, bigger isn’t always better. Lenders are more likely to approve smaller loans because they don’t want too much risk on their hands – and if you’re not pulling in an impressive income level, that can still be manageable for them.
To ensure your loan is approved easily, take the time to figure out what amount of money exactly meets your needs so you won’t end up asking for any extra funds from lenders!
Keep your loan term short
Taking out a long-term loan may seem alluring due to the lower monthly payments, but it can present an increased risk for lenders.
As well as taking longer for them to be paid back in full with interest added on top of this, you run the chance that something could go wrong and leave you unable to make repayments.
While such loans are sometimes more accessible than shorter ones overall they cost more – so if possible opt for a shorter term which will keep costs down and maximize chances of approval.
Consider a cosigner
If you’re looking to secure a personal loan, but don’t have the necessary credit or income qualifications on your own, consider asking someone with better credentials than yours to cosign.
Not only is this an option accepted by most lenders but they view multiple parties responsible for the repayment of the debt as more feasible.
But it also adds another layer of accountability from both ends – making sure that you remain committed to paying back what’s owed within agreed upon terms and timescales.
Take Out a Self-Employed Loan from Sprint Funding
Ready to take out a loan? Improve your chance of being approved by implementing these simple steps!
From improving credit and income to working with the right lenders, there are many things you can do now that will dramatically increase the likelihood of getting accepted.
To know more about our self-employed loans, give us a call at Sprint Funding.