Can I get a loan if I am self-employed and have bad credit?
Being self-employed and having a poor credit history can make borrowing feel uncertain, especially when your income changes from one month to the next. It does not automatically mean you cannot check whether you are likely to be accepted for a personal loan. 118 118 Money considers each application individually, including your income, household outgoings, credit history and whether the repayments would be affordable.
We do not offer a guaranteed loan product for self-employed people or for people with bad credit. A useful first step is an eligibility check, which gives you an indication of whether you are likely to be accepted before you make a full application. It will not affect your credit score, so you can consider your options without committing to a full application.
A personal loan is a serious commitment. Before you borrow, look at what you can reliably afford in an ordinary month, not only when work is busy or a client payment has just arrived. The goal is a repayment that remains manageable throughout the term.
Start with income you can rely on
Self-employed income can be uneven. You may have a strong month followed by a quiet one, work seasonally, wait for invoices to be paid or need to put money aside for tax and business costs. When you are working out whether a loan payment fits, base it on a realistic level of income rather than your best recent month.
Look back over several months. Bank statements, invoices and accounts can help show the pattern in your income, including quieter periods.
Keep business and personal costs in view. Equipment, travel, insurance, tax and subscriptions can affect how much is left for your household budget.
Give accurate details. A clear picture of your income and outgoings helps us assess whether a repayment could be affordable.
It can be tempting to focus on money due from upcoming jobs. Until it has been paid, it may be safer to treat it as uncertain. A budget that works even when a customer pays late or work slows down gives you a more dependable basis for a borrowing decision.
Understand what bad credit can mean for an application
Bad credit is not one single thing. It can include missed payments, defaults, county court judgments, using a large proportion of available credit or a limited credit history. Lenders use this information alongside your current circumstances, rather than looking at one detail in isolation.
If you have missed payments in the past, it is important to be honest with yourself about why they happened and whether the same pressure could happen again. A new loan repayment must sit alongside rent or mortgage payments, household bills, food, travel, existing credit and the costs of running your work.
Checking your eligibility before making a full application can be a sensible way to explore your options. It does not guarantee a loan offer, but it can help you decide whether it is worth continuing without affecting your credit score.
Check the repayment against a quieter month
A fixed monthly loan payment needs to work throughout the year. List your essential household costs first, then add regular credit payments and the business costs you cannot avoid. Compare that total with the income you would expect in a typical quieter month.
If the repayment only works when every invoice arrives on time, when you have extra work or when you use an overdraft, it may be too much pressure. It is better to reduce the amount you need, wait until your income is more stable or consider another solution than to take on a payment that could become difficult.
Our loan calculator can help you compare likely monthly repayments over different terms. A longer term can lower the monthly payment, but it may increase the total amount you repay.
Prepare for an affordability check
Before you start, take time to gather a realistic view of your finances. You do not need to make your situation look better than it is. Accurate information about earnings, regular spending and existing commitments helps produce an outcome that is more useful to you.
Think about the commitments that can be easy to miss: annual insurance, tax payments, equipment repairs, childcare, travel, mobile contracts, subscriptions and any payments you make to support family members. These costs still matter even when they do not leave your account every month.
If your income includes benefits as well as self-employed work, include them accurately as part of your overall circumstances. You can also read our guide to loans for people on benefits for more information about checking affordability when your income comes from more than one source.
Borrow for a clear, manageable purpose
Borrowing is easier to assess when it has a specific purpose, such as an essential repair, replacing a household item or spreading the cost of a planned expense. Decide what you need before you apply and ask whether a smaller amount would solve the problem.
It is worth pausing if you would use the loan to cover everyday living costs, rent, food, overdue bills or existing payments that you are already struggling to manage. Another repayment can make a difficult situation worse. Speaking with the company you owe, reviewing your budget or getting free, independent debt advice may be a better first step.
What happens after an eligibility check?
An eligibility check gives an indication of whether you are likely to be accepted based on the information you provide. If you choose to continue, you will complete a full application and a final decision will be made after a fuller review. Being eligible to apply does not guarantee an offer.
If approved, the amount, interest rate and repayment term available may depend on your circumstances. Read the terms carefully before accepting an offer and make sure the payment remains comfortable alongside both your household needs and your work costs.
Once approved and set up, funds could arrive in as little as 15 minutes. This can vary from 15 minutes to 2 hours depending on your bank. Take the time you need before accepting any credit agreement.
When a personal loan may not be the right answer
Credit costs money. If your income is falling, you are already missing payments or you cannot cover the essentials without borrowing, taking out a new loan may add to the pressure. It can be better to deal with the immediate problem first, rather than relying on a repayment that could become unaffordable.
Our money guidance can help you think through your next step. For a wider explanation of how personal loans work, visit our loans page.