Having trouble getting approved for a loan because you’re self-employed? You aren’t the only one. It’s a common complaint we hear from our customers. 

The good news is, there are a few things you can do to slowly but steadily build your credit score to help you get a better loan. Here are the three most important things to focus on. 

Self-Employed Credit Tip #1: Keep Recurring Debt Low

We get it – there’s a lot riding on your business. It’s common for new businesses to bootstrap using credit cards or personal loans. 

That can work in the short term but focus on keeping your recurring debts as low as possible. Having a high credit card bill that never gets paid off can lower your credit score. The recurring debt is a sign that you can’t pay, which is never a good thing. 

If you can’t pay off the debt completely, consider either one of these 2 strategies:

Debt Snowball – this is where you pay off the lowest balance first, then focus on the next lowest, etc. 

Debt Avalanche – this is where you pay off the balance with the highest interest rate first. 

Both have their pros and cons. The key is to pick a strategy and execute it. 

Self-Employed Credit Tip #2: Keep Credit Lines Open

Remember when you signed up for that credit card for a 10% discount at Target, but never actually use it?

Or how about that card you got in college but paid off once you got a “real job?” 

It can be tempting to close cards you don’t use anymore – but don’t do it. One of the most important factors in calculating your credit score is how long you’ve had credit lines open. If you think you’ll be tempted to use it, just cut up or freeze the credit card in a solid block of ice. That way you can keep the line open (and improve your credit score) without the temptation to use it constantly. 

Tip #3: Only Open New Credit when Necessary

Opening up new lines of credit isn’t necessary, assuming you already have some. It is a big deal to go from zero credit cards to one, or no car loan to one. But once you have a few lines of credit, opening more just adds complexity and doesn’t help your credit score. 

In fact, too many credit inquiries in a short period of time can harm your credit. That tells the monitoring companies that you’re thinking of borrowing a lot of money, which generally isn’t a good sign. 

When you’re self-employed and run your own business, you have a lot stacked against you. Your income probably isn’t consistent, you have a lot of stress, and there are always things you can be doing to grow your business. 

Don’t let your credit score be one more thing on your shoulders. Use these tips to build your credit score and help you get a loan with better interest rates and terms.