If you want to get a loan, do you need anything more than good credit? Strong credit will improve your chances, but it's not enough.
Lenders use several criteria when evaluating loans. They try to figure out whether or not you'll repay -- and previous borrowing behavior is an important part of the equation. However, you have to show that you have the ability to repay any new loans just like you've repaid in the past.
Lenders are most comfortable when you have plenty of income to cover loan payments. Without income, how can they expect you to repay -- even with great credit?
Unfortunately, "income" means different things in different circumstances. In particular, self-employment income creates problems when you want to borrow because some lenders are hesitant to work with the self-employed. Consumerism Commentary discusses how even borrowers with credit scores above 800 can't get a home loan. Last week, we saw a similar case in which a self-employed borrower had to hunt for a loan.
If you're self employed, be sure to shop around. Talk to your lenders early in the process to find out what kind of documentation they need to verify your income.
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