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There are many rewards that come with being self-employed – not least the opportunity it presents for you to effectively “be your own boss”. 

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However, many self-employed people do worry about the process of applying for a loan – including what their chances are of being approved by a lender compared to people who are employed on a company’s payroll, and what they will do in the event of such rejection. 

If you are self-employed, and you have bad credit… well, you might fear that you have almost zero chance of being granted a loan. But is that perception a myth, or reality? 

Please note, it's crucial to fully understand the potential risks associated with taking out a loan, especially if you have a history of bad credit. Failing to keep up with repayments can further impact your credit score and financial stability.

Neither self-employment, nor bad credit, is an automatic bar to you being approved for a loan 

Neither self employment nor bad credit is an automatic bar to you being approved for a loan

Let’s take each of these factors in turn, starting with self-employment. The bad news is that if you are self-employed, your options for a loan may be more limited that would be the case for an equivalent employed person (presuming all other obvious factors, such as the applicants’ credit history and the loan amount sought, are the same). 

This is because lenders like to see certainty when they are considering applicants for a loan, and they can often hesitate when presented with a self-employed individual, whose income may be liable to vary each month. It might cause the lender to wonder what the likelihood is of the money they lend being paid back on time, in accordance with the loan terms and conditions. 

But on the other hand, loan options do exist out there for self-employed people. If, for instance, you are a self-employed person who has a good credit history and who satisfies the affordability criteria a potential lender uses when processing the application, you might well get approved for the loan that you seek. 

All of this leads us to the question of what happens if you are self-employed and you have bad credit. We can’t lie to you here: your options for a loan in such circumstances might be somewhat more limited, or you may be presented with loan offers that don’t have greatly attractive terms attached to them. 

However, it is difficult for us to put a number or percentage on your prospects for getting a loan. After all, this will depend on a wide range of factors, such as how bad your credit score is, and the amount of money you are seeking as a loan. 

Plus, it is important to bear in mind that some lenders out there specialise in making available loans for bad credit in the UK. Some of those lenders are represented on our own lender panel here at CashCompare. Given that these companies tend to target categories of people who might often get turned down by other lenders, it may well be possible for you to receive an attractive loan offer from one of these specialist bad-credit lenders. 

It's a quick and easy process to see whether you could obtain a loan 

It's a quick and easy process to see whether you could obtain a loan

There’s another reason why we haven’t given a percentage figure for the likelihood of a self-employed individual with bad credit getting approved for a loan… if you are such a person, you can find out right now what your chances are likely to be. 

While there are specialist lenders who may consider your application even with bad credit, approval is not guaranteed and depends on a comprehensive assessment of your individual financial situation and ability to repay.

Spend just a few minutes filling in and submitting our online loan request form, and we will get to work sifting through the loans our featured lenders can make available to you. Before too long, you will be able to find out what kind of loan you might be able to obtain – but if you don’t like the offer you receive, you won’t be under any obligation to accept it. 

We encourage you to carefully assess your financial situation and consider whether a loan is the right choice for you. Taking on a loan is a significant financial commitment that should align with your long-term financial goals and repayment capabilities.

That quick, easy, and no-obligation service is just one more reason why, when it comes to loans for bad credit in the UK, we are one of the most highly respected credit brokers here at CashCompare. So, why not take a look now to discover what could be possible for you as a self-employed individual, almost whatever your credit score may presently be? 

This blog is for informational purposes only and should not be considered financial advice. Loan availability and approval will vary based on individual circumstances and lender criteria. Before making any decisions, especially if you're self-employed and dealing with bad credit, you might find it beneficial to seek independent financial advice.

CashCompare is authorised and regulated by the Financial Conduct Authority, ensuring responsible and transparent brokerage services.

"Warning: Late repayment can cause you serious money problems. Always consider if borrowing is the right option for you and ensure you can repay your loan." For help, go to moneyhelper.org.uk.

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