Some banks don’t like approving people who are self-employed. Because of the increased difficulty in proving your self-employed income, certain banks may find it harder to process your loan if you’re self-employed. There is also the issue with increased writeoffs. Be aware of these banks, not all banks are biased toward self employment.
Get a second source of income. Income is just as important as credit when applying for a loan. You can get a second job for six months and pay down your debt. This way your credit score will be better and your income will be higher. After you get approved for the loan, you can quit the second job.
Look at private lending. Private lenders are more likely to process your loan because they specialize in high risk loans. They will want you to put down a higher percentage and pay a higher interest rate due to the high risk nature of the loan.
Don’t let a high risk lender charge you excessive interest rates. Some lenders will charge you excessive interest rates because of your high risk status. You should shop around before deciding what lender to go with.
Get a co-signer. A co-signer with good credit can be the difference in getting a loan approved. Consult with friends and family before reapplying if necessary.
Keep meticulous financial records. Banks like your income records to be consistent in the application process. It’s a good idea to keep individual files for your financial records. You always want to have two copies of all your important financial documents.