Being self-employed, offers a lot of benefits to your lifestyle. You get to work as per your ease. Be it time, commitment or returns, everything is flexible for self-employed people. You are your own boss. But sometimes, the convenience to work and earn hurts your credit options.
You ought to own a potent record of past earnings to become eligible for loans. If you have just started working on your own as a freelancer, part time employee or a contractual worker, you may find it difficult to borrow in the UK. Going directly to a lender may attract a red flag in your credit report as every loan query and loan rejection would make a negative credit history for you.
Herein, you need to know how to borrow without hassles and protect your credit report at the same time.
Contact an FCA authorised loan broker
Brokers are middlemen between lenders and borrowers. When you contact an FCA registered loan broker, you could be rest assured of practical loan advice. They are not loan sellers and thus there would be no claims regarding the deals. All they would do is search for available loans in the UK.
Being self-employed, there is high possibility that you are unable to prove your loan repayment capacity. The broker would help you get loans with flexible eligibility criteria. For example: If you have just started working from your home, say, from past 1 year and have earned decent annual income. But your monthly income has not been steady in this period. Herein the broker can help you locate a lender that measures your credit worth considering your annual income and not the monthly income.
This may entail high interest rate; but the broker would help you do the negotiation while establishing your credit worth. Likewise, if you have been working full time in the past, the broker can help you use your past income proof to get loans based on your employability.
All in all, using professional advice of a loan broker, you would get to know about the practical steps to self-employed loans with no upfront fees.
Borrow as per your repayment capacity
After knowing about the course to self-employed loans, you must know clearly what you need and why. You need to clearly calculate how much you want to borrow. In face of current borrowing issues, you should borrow to improve your credit worth. This will help you get better loans next time.
Always borrow according to your repayment capacity. Make sure you compare and choose the loan according to ease of repayment. It is a well-known fact that affordable instalments are easier to re-pay on time. Small financial lapses would not hurt your repayment plans.
Every successful repayment of loan would make a good credit history for you. With successful closure of loan, you would become eligible for more loans in future.