Repair your credit score as a freelance writer
It can be difficult for a “non-traditional” employee to repair a credit score since most lenders prefer W-2 income. As a freelance writer, getting new credit approved so you can improve your credit score can be a hassle – but we’ve got a few tips any winner can use.
Break down your credit score to rebuild it
The pandemic has prompted many people to work freelance and odd-job economy to cover their bills as traditional job opportunities dwindle thanks to closures. Being self-employed can give you the freedom to work on your own terms, but many traditional lenders may be skeptical about your approval for a loan because your income may not be seen as a source of W-2 income – work provided. by an employer.
Repairing your credit score is possible when you are working for yourself. Here are some different tactics you can use as a freelance writer to repair your credit score:
Do you already have bills that you pay every month? Do you have a good repayment history with these accounts? Then, you may find it beneficial to use a credit reporting service to get these accounts on your credit reports.
Things like video and music streaming services, your electric bill, car insurance, and phone bill could be the way to improve your credit without having to take on new credit. One such service is Experian Boost, which examines your current bills and attempts to put them on your credit reports so that your timely payments contribute to your credit score. And many are free too! Visit our resource center for more information on services like this.
- Consider a secured credit card
A secure credit card is secured by a deposit that you pay when opening the account. If you fail to pay off the balance on the card, your deposit covers it so the lender doesn’t lose money. Because you start the account with a deposit, backing up the card with your own money, borrowers with less than perfect credit have a higher chance of being approved for a secured credit card rather than a non-credit card. guarantee – which is not backed up by anything. .
Borrowers are recommended to try a credit union for a secured credit card for a better chance of approval, and it helps if you are and have been a member for some time. Getting approved for a secured credit card is usually easier than an unsecured credit card, and this could be how you increase payment history and mix up your credit report with a revolving credit account. .
- Find a co-signer or co-borrower for a new loan
If lenders are struggling with your income type and you’re trying to take out a car loan to repair your credit, a co-signer or co-borrower might help increase your chances of getting approved.
A co-signer who lends you their good credit rating to help you meet credit rating requirements. If you have a non-traditional type of income associated with a bad credit rating, it can be difficult to get approved on your own. A co-signer could help you get approved for a loan, and making payments on time will improve your credit history.
A co-borrower is someone who adds their own income to yours on the loan application. Co-borrowers are usually spouses or life partners, and they combine their income to get approval for larger auto loans. If your independent income prevents you from meeting the income requirements, a co-borrower may be able to help. With a co-borrower, you are both responsible for the loan and you both report it on your credit reports.
- Consider special financing
Special financing is another term for a bad credit auto loan, and subprime lenders are included in this category of auto financing. These lenders are registered with dealers and they are able to help borrowers with bad credit. They typically require their borrowers to have a minimum gross monthly income (before tax) of around $ 1,500 to $ 2,500.
Not all subprime lenders can approve a loan for borrowers with income of 1099, but many do. To prove that you have enough self-employment income to afford a car loan, expect to need about two to three years of tax returns and possibly bank statements.
Subprime auto loans are reported by the credit bureaus. Your timely payments and the auto loan can help you build a positive repayment history, add to your credit mix, and prove to credit reporting models that you are ready and able to repay your loans.
Understanding leads to smarter actions!
No matter how you get your money, through an employer or freelance work, understanding what your credit score is made of is a vital step in fixing it.
There are a few credit scoring models, but the model most frequently cited by lenders is the FICO credit scoring model. It’s a three-digit number between 300 and 850 based on the information recorded on your credit reports. The higher your credit rating, the better your situation as a borrower.
Here is what the FICO credit score is made of:
- Payment history – 35%
- Amounts due – 30%
- Length of credit history – 15%
- Credit mix – 10%
- New credit – 10%
Payment history is the most important part of your creditworthiness. This is because lenders are generally more concerned with your ability to pay off loans on time, consistently. For this reason, the number of on-time payments that you reported on your credit reports has the most weight in determining your credit score. However, your missed and late payments also carry a lot of weight – sometimes more than on-time payments.
One of the best ways to improve your credit score is to pay all of your bills on time, avoid missed and late payments, and have those accounts listed on your credit reports to add meat to the pockets. other categories.
We want to help you find your next car loan
Many new borrowers and bad credit borrowers are turning to auto financing as a way to boost their credit history and improve their credit score. If you need a car and need to repair your credit then consult us at Express auto loan!
We have established a nationwide network of Special Finance dealerships to help borrowers find the resources they need for vehicle financing. To get started, complete our free auto loan application form and we’ll immediately get to work finding a dealership in your area who has signed up with subprime lenders.