Improve creditworthiness as a self-employed person

 

 

 

 

Self-employed people know the problem. In order to get a loan, especially for larger sums, they often have to put in more effort than permanent employees. You simply have the problem of missing monthly and secure wages, so that income fluctuates more often.

Independence also partially affects the credit check. But do self-employed people just have to accept the situation or do they have opportunities to improve their creditworthiness? And are there any alternatives if money is needed quickly?

Obtain credit information and make changes

Obtain credit information and make changes

This trick should even be carried out regularly regardless of any funding requests.

The information files, for example the credit, offer every citizen free of charge to obtain their own information.

It contains the data stored about the respective person – positive and negative – and gives a reliable insight into the current state. And this is important if your credit rating fluctuates or if there are fears that it may stand in the way of the desired financing.

But how should the information be dealt with?

An overview:

  • Checking – the entries and data should always be checked. How old are they? Are the address details correct?
  • Have incorrect entries deleted – it is of course always possible that there are incorrect entries in the information. Identical names can do this, as can overzealous sellers who report a missing payment before checking the accounts.
  • Deletion periods – the following applies here: Entries under 1,000 dollars are deleted in one year, higher entries after three years. However, since the entries are often removed at different intervals, there may still be older entries in the file. And with a little luck, entries that expire in two months can be removed earlier.

Comments about self-disclosure should be sent to the respective file in as detailed and friendly a way as possible. It is true that friendliness pays off, because not only are older entries now removed faster, entries that are soon to expire are also removed early if the person making the request is friendly and polite.

Second borrower and other collateral

If your credit rating is not sufficient, there are other options to facilitate financing. But they also have to consider the risks:

  • Second borrower – especially for married couples, it is a good thing that a loan is taken out on both persons. But it also works with friends or family. It is important to remember here that if the main borrower does not pay, the additional person can and will be used. Such options should therefore only be used if it is ensured that there will be no loss of payments. The same also applies to guarantors as security.
  • Collateral – they are an easy way to get a loan. The amount of the loan also plays a role here. Collateral is valuables or goods that, if necessary, can be seized and sold by the lender. Houses, apartments, high-quality cars or valuable collections count among them. The guarantee described above is also part of the loan collateral.

In principle, it should be noted with second borrowers, guarantors, but also when depositing collateral, that they have to vouch for a loan that has not been repaid and canceled.

Alternative solutions

Alternative solutions

In addition to the typical options, there are special loans or solutions that can also be used without a detailed credit check. It is important here to look at the terms and their seriousness, especially with lenders.

Even today there are so-called loan sharks that take advantage of the financial situation of customers and plunge them even deeper into misery. On the other hand, there are absolutely reputable and recommendable lenders and lenders:

  • Loans despite credit – they use higher interest rates to offset the risk. Security payments and checks are also often added, but these do not refer to the credit – i.e. the past – but the current state. Regular incoming payments are therefore more important. In addition, collateral usually has to be deposited.
  • Personal loans – private loans are also common. There are a number of portals online through which private individuals grant smaller loans and use this route as another form of investment. Interest, credit terms and terms are often agreed between the parties. Important: Always insist on a correct contract, because this also secures the borrower. Without a contract, a private individual could always claim that the loan would have been 5,000 dollars – even though it was only 3,000 dollars.
  • Mini loans – if the amount required is only a small amount, mini loans could be suitable. They rarely amount to more than 1,500 dollars, but are awarded without special and complex tests. It is important to note the runtime here. The deadlines are usually one to three months. Interest rates are higher than ordinary loans, but due to the short term, this point is negligible.
  • Pawnbrokers – Pawnbrokers are more likely to be associated with smaller amounts. That’s correct, but there have long been specialized car pawn shops that focus on cars. Depending on the provider and contract, it is even possible to continue using the car during the contract period.

However, obtaining money from pawnbrokers in large and small is always a short-term solution. Pawnbrokers generally offer quick payouts and short contract terms.
The conditions are then often more expensive than conventional loans, but payments can also be made without proof of credit.

There are also alternative solutions with poor creditworthiness

Conclusion: There are also solutions for the self-employed

Of course, the self-employed also get a loan. Your own creditworthiness and the regularity of your income play a role here.

If things get tight, there are also good options via mini loans, personal loans or pawnbrokers. For spouses in particular, it can also make sense to include the spouse in the loan. However, this should be discussed in advance since the second borrower is now also required.

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