Understanding Refinancing with Bad Credit – A 10-Minute Guide
Understanding Refinancing with Bad Credit: A 10-Minute Guide Table of Contents Refinancing your home loan can be a powerful financial tool. It allows you to
If you’re looking at applying for a self-employed loan, you might be concerned about the risks involved. A self-employed loan does not have any more risks than a traditional loan does. All loans come with risk, as they can affect your credit score. However, if you manage to make your repayments on time, a self-employed loan can actually be beneficial to your financial history, and your credit history.
Read on below to find out more about the risks of a self-employed loan.
When you’re self-employed, your income can be quite varied. You might go through periods where you have a lot of income coming in, and times when your business is slow. The irregularity of your income can make paying bills and making loan repayments difficult.
Having an irregular income may also make it difficult to get approval for a loan through a traditional lender such as a bank, although there are a range of lenders who specifically offer low doc loans for the self-employed.
The one risk that comes with any loan is the effect on your credit score. If you manage to make repayments on time and have no issues with defaults, you may find that your credit score increases from what it was when you first got approved for the loan. Good repayment history is good for a credit score, and you may see your credit score grow over the life of the loan.
On the other hand, a loan may affect your credit score if you fail to meet your repayments. If you miss repayments regularly, you could see your credit score reduce to reflect the payments you have missed.
If you are late with your repayments, a default could end up being listed on your credit file, depending on how late the payment is. As well as having a default listed, your lender may add late charges to your repayment fees. Before listing a default, your lender must send you two separate notices requesting payment and letting you know the debt may be listed on your credit file.
In both cases, late payments and defaults may harm your credit score. Your repayment history, including any missed payments, may remain on your credit report for two years. Defaults will stay on your credit report for five years, regardless of whether or not you have paid off the overdue amount.
This can be said for any type of loan or finance, as missing repayments could lower your credit score. However, if you are able to make your repayments on time, you could see your credit score improve over time.
Lenders often see self-employed individuals as more of a risk compared to other applicants due to the risk of small businesses failing. Some self-employed people may find it harder to prove their regular income or any assets that they own. Income fluctuations can come with being self-employed, which doesn’t help when most lenders want to see a stable profit record. To lenders, a bad few months of inconsistent income may make repayments hard.
As a general rule, you usually need to have been in business for at least 18 months, or you need to have been in the same industry for at least two years. However, these days, more and more Australians are working for themselves across various fields and industries.
However, some private and specialist lenders don’t feel this way. You might have more luck not only finding a self-employed loan but getting approval for one if you use a private lender. Some private lenders specialise in lending to those who are self-employed and struggle to provide the usual forms of documentation such as payslips. If you’ve been rejected by traditional lenders because of your employment status, or not being able to provide enough documentation, a private lender who specialises in self-employed loans may be able to help you.
We can help to get you a loan in four easy steps. Firstly, you will have a free consultation with one of our specialists, and we will tailor-make you a loan. Then we will negotiate with lenders on your behalf before you are approved.
We have helped countless Australians with both good and bad credit ratings to get self-employed funding. If you meet our lending criteria, we can have you approved on the same day that you apply. You shouldn’t have to wait days or weeks for an application result.
Our finance specialists can help you find the right loan for your project. If you are one of the many Australians finding getting a loan difficult, Tiger Finance can make the process simple and pain-free. Call and speak to one of our loan specialists today for your free initial consultation.
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*Interest Rates: Conditions, fees and charges apply. Interest rates are subject to change and will vary. We cannot guarantee that the interest rate advertised on our website will be the one offered to you. Interest rates offered will be dependant on your situation.
*Consolidating high-interest personal loans and credit cards into a lower-interest home loan may result in significant savings on interest for some consumers. However, this solution may not be suitable or accessible to everyone.
*The approval timeframe is varied. Approval time is subject to change depending on your circumstances or loan type. Processing times may be subject to your lender.