Getting loan approval as an independent contractor can be a daunting task. However, taking the right steps and understanding the basics of what makes an attractive prospect for lenders can make this process much easier.
We’ve put together a few ideas for ensuring that loan applications you make are approved first time, so stick with us as we highlight the main dos and don’ts.
Utilizing Credit Scores and Reports to Secure Loans
Having a good credit score is an important factor when applying for loans as an independent contractor. You should regularly check your credit report to ensure accuracy, make sure you are up-to-date on payments, and address any discrepancies that may appear.
In addition, you should also seek ways to improve your credit score if necessary by paying off debts, or reducing the amount of money you owe.
Establishing Good Financial Habits for Loan Eligibility
Having good financial habits can help you become more loan-eligible, whatever your circumstances. And independent contractors must be savvy with their money to keep their careers on track anyway, so it’s worth knocking bad habits on the head as well.
For instance, building up your savings account is one way to demonstrate responsible financial management to potential lenders.
You should also set a personal budget and track any expenses so that you can stay within your limits and avoid overextending yourself with debt in the future. Opening a bank account online and using the built-in features to keep tabs on your income and outgoings makes this whole process a breeze.
Most significantly, curbing unnecessary spending will make it less of a struggle to secure a loan, as lenders need assurance that you have enough money left over after paying bills and other essential expenses each month. Live within your means, not beyond them.
Researching Different Types of Loans for Your Situation
There are lots of loan products on the market at the moment, so you need to do your research in order to find the one that’s the best fit for your situation.
For example, some lenders have loan products that are tailored specifically for independent contractors, so you should always inquire about those first.
You should also consider factors such as interest rates and repayment terms in order to make sure that you choose a loan that works within your budget and financial goals.
Negotiating the Best Terms on Your Loan
It might sound intimidating, but it’s worth striving to negotiate the best terms possible on your loan. To do this, take advantage of any offers that lenders may have such as lower interest rates or no closing costs. Getting in touch with a lender directly and speaking to a team member can also let you tap into offers that aren’t found anywhere else.
Other steps will drive down the cost of borrowing; if you’re able to make a higher down payment than what is required by the lender it can help reduce your monthly payments, and overall cost of the loan.
If you’re not satisfied with your options from your existing bank, don’t be afraid to shop around for different loans from competitors in order to find one that provides competitive terms, and suits your circumstances.
As well as acting to make your finances as squeaky-clean as possible, don’t forget that when applying for a loan, you’re the customer, and so you’ve got a degree of power in forging this relationship with a lender. That’s how you’ll not only improve your chances of approval, but also tap into top deals.