Lenders usually follow a cautious approach while granting Personal Loans to self-employed individuals like freelancers. However, a worthy credit score and sufficient income proof can improve the chances of your loan approval.
The most distinct advantage of availing an unsecured personal loan is that it’s a collateral-free mode of financing. It means you don’t have to put your personal assets on the line to get access to funds. The loan proceeds can be used to meet your diverse financial needs, be it tackling a medical emergency, funding your higher education or planning a family vacation.
However, you need to fulfill certain eligibility guidelines set by the lenders to apply for a personal loan with them. Generally, it depends on your age, CIBIL score, place of residence, monthly income and employment status. In case, you fail to meet the eligibility criteria, the lender may reject your loan application or charge you high-interest rates on the personal loan.
Recommended For You:
- 6 Investment Plans for Your Child’s Future
- The Business Structure of Insurance Company
- 5 Situations When Taking a Personal Loan is a Good Idea
Can a Freelancer Avail a Personal Loan?
In the absence of job security and a regular stream of income, lenders usually follow an understandably cautious approach for approving personal loan applications when it comes to self-employed individuals like freelancers. They’re a bit of a gamble for the lenders since they don’t have a fixed monthly income to support the loan EMIs over a considerable time period.
However, if you can prove to the lending institution that you will be able to repay your loans in time, you’ll significantly improve your chances of availing a Personal Loan. The best way to do so is by having a good credit score and choosing the right lender for your funding. Here are a few of the ways in which you can boost your personal loan eligibility:
Build a good credit history
Lenders tend to look favorably towards loan applicants with good credit history. It can improve your chances of availing a personal loan, and that too with better interest rates. Start at your credit report and check if all the information is accurate. Pay all your loan EMIs and credit card bills on time and maintain a low credit utilization ratio.
Pay your taxes
Apart from being a responsible citizen, paying your income tax may also help you in getting your personal loan application approved by the lender. You can furnish your Income Tax returns for the past two to three years as proof of your long-term earnings and hence assure the lender about your loan repayment abilities.
Choose the right lender
It becomes very important to choose your lender wisely to increase the chances of getting your loan application approved. The eligibility criteria for personal loans vary from lender to lender and hence, quick research about various lending options available in the market may help in selecting the right loaner as per your financial situation.
There are many lenders that provide instant Personal Loans for freelancers with relaxed eligibility criteria and minimal documentation. Moreover, with pre-approved offers from NBFCs, you can get hassle-free personal loans and other financial services.