Can you get a loan if you’re self-employed?

Yes, you can get a loan if you’re self-employed, but you may find it more difficult. Lenders may charge you higher interest rates if they see you as high risk. However, there are lenders who specialise in providing finance for people with less-than-perfect credit scores.

4 min read
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What do lenders look for? 

Being self-employed shouldn’t stop you from getting a personal loan, though keep in mind that each lender uses their own criteria. So, you could be accepted by one and turned down by another. 

When you come to apply for a loan, most lenders will ask for your employment status and income. They do this to make sure you can afford the monthly loan repayments on top of your other outgoings. 

If you’re self-employed, your income may go up and down and vary from month to month. So, you might not have an exact figure available. In this case, the lender may ask you to provide an average monthly amount - along with proof of your income. 

They’ll also run a credit check to see how well you’ve managed money in the past. They use this information to predict your future behaviour and see how much of a risk it’d be to lend to you. At the end of the day, they want to know that they’ll get their money back. 

What documents will you need to provide? 

As part of the application process, the lender will ask for proof of your income and outgoings (in the form of bank statements and wage slips, for example). It’s best to contact your lender to find out exactly what they need from you. It can vary depending on your individual circumstances and the lender’s criteria. 

Can you get a mortgage if you’re self-employed? 

Yes, you can get a mortgage if you’re self-employed, but your options may be limited. Lenders don’t put anyone into financial difficulty by lending them more than they can afford to repay. So, they might not be willing to let you borrow if your income isn’t guaranteed, or it varies from month to month. But that’s not to say you won’t be able to get a mortgage at all.  

Lenders will want to go through your finances and check your employment record. 

If you’ve been working in your field for a while and you’ve received a consistent income, they may be more likely to lend to you (compared to if you’ve just started your career, for example). 

For mortgage advice, we suggest you speak to a mortgage lender, or broker a (like Ocean). They’ll be able to take your individual circumstances into account and recommend a product that is suitable for you.  

Remember, a mortgage is not to be entered into lightly. It is secured against your property, which means your home could be at risk of repossession if you don’t maintain the repayments on time, every time. 

Can you get a personal loan with bad credit? 

If you’re self-employed with a poor credit history, you may face more difficulty getting accepted for a loan. Factors that can affect your credit history include (but are not limited to): 

  • Late and missed payments
  • Defaults and CCJs
  • Multiple credit applications made within a short timeframe

Negative markers like defaults and CCJs stay on your credit report for six years. They may give lenders the impression that you are high risk, which could put them off.  

Having said that, the impact these markers have normally decreases over time. Plus, defaults and CCJs will drop off your report automatically after six years. 

So, you might want to wait until your credit history improves before applying for finance again. This could give you a better chance of being accepted with lower interest rates. 

Or if you don’t want to wait, there are lenders who provide finance to those with bad credit. Here at Ocean, we work with a panel of lenders who can help if you are in this situation.  

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Intelligent Lending Ltd is a credit broker working with a panel of lenders.