HOW TO PROVE YOUR INCOME WHEN SELF-EMPLOYED?
Every lender needs to take the right approval decision and offer loans only to those borrowers who are not risky and will be able to repay the money on time. This decision depends on various factors. Most of them aim at proving your creditworthiness with the help of assessing your income. It’s easy to check it with employed borrowers while the unemployed and self-employed are more complicated. They can’t provide pay stubs from their employer as proof of regular income. Let’s see how else they can show that they are reliable applicants for a loan.
1. Tax returns and tax transcripts from the IRS with the details of your adjusted gross income may be used instead of a W-2s or pay stubs. Besides, not only the overall amount counts. The lender can base the approval decision on your profit excluding your loss.
2. A few weeks’ worths of bank statements can show if you deposit enough money into your bank account. This amount will show if you’ll be able to make fixed loan repayments.
3. Collateral or co-signer may help you get a secured loan in case unsecured financing is unavailable due to your self-employed status. Besides, a co-signer with good credit will let you get more money at lower interest rates.
READ MORE: https://compacom.com/articles/apply-loan-if-you-are-self-employed