How to apply for a credit card when you’re self-employed
Am I eligible to apply for a credit card if I am self-employed?
Absolutely. If you’re self-employed and want to use a credit card to either manage expenses or free up some cashflow, you can still apply for most credit cards.
You’ll likely have to prove that you have a steady income to show that you will be capable of making your repayments. This means you may be asked for documents such as a tax return, bank statements or a profit and loss statement — it is smart to have any records on hand that will help prove to a credit card provider that you are actually self-employed and have a stable income.
Credit cards by provider
Find out if you can apply for a credit card with a specific provider in the table below and learn about the necessary documents and information you’ll need to have on hand to apply.
| Provider | Who can apply and required documents |
|---|---|
| American Express | Self-employed: Yes. Not specified online, however it is advised to:
|
| BMO | Self-employed: Yes. Not specified online, however it is advised to:
|
| CIBC | Self-employed: Yes.
|
| MBNA | Self-employed: Yes.
|
| PC Financial | Self-employed: Yes.
|
| RBC | Self-employed: Yes. Not specified online, however it is advised to:
|
| Scotiabank | Self-employed: Yes.
|
| TD | Self-employed: Yes.
|
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What will I need to apply?
- Proof of earnings. You’ll typically need to show documents that verify a steady income for at least the last two years. It could be in the form of a tax return, paycheque, expense report, a profit and loss statement, or anything else that shows you have money coming in. If you have an accountant who can verify your income, you’ll have a much easier time when applying for a credit card.
- Savings. Your ability to save will show lenders that you’re able to manage money responsibly and that you will not be a high risk applicant prone to making late payments.
- Credit history. The better your credit history, the better chances you’ll have of being approved. This seems obvious but is worth repeating because it is what lenders will evaluate when deciding whether or not you’ll be approved for a credit card or loan in the future.
If you’re applying for a credit card for either business or personal related expenses, be sure you stay within your means and have a budget and repayment plan lined up. This will ensure that you’ll get the most out of your credit card and help you steer clear of debt.
What if my credit card application has been denied?
Don’t stress! Here are some alternative options that will help you get a credit card:
- Secured credit card. Secured credit cards can help you build credit and are a great way to roll your credit history down the right path. This type of card operates just like a regular credit card, but it is preloaded with funds that will act as security in case you default on payments. The amount of funds you provide as security is usually your credit limit each month.
- Cosigner. While this option will greatly improve your chances of being approved, it is important to know that when your cosigner signs the dotted line, they become responsible for any debt you acquire if you’re unable to make payments.
- Authorized user. This option is only available if someone who has good credit will vouch for you and link a card to their account with your name on it. Only use this option if you’re sure that you’ll be able to use your card responsibly since it is linked to somebody else’s account and could negatively affect their credit.
Mistakes to avoid
- Applying without researching. If you’re self-employed, you’ll need to provide additional documents and meet the eligibility requirements to receive approval. Rejected applications will have a negative impact on your credit file, so you want to conduct the necessary research to improve your chances of approval in the first place. If you do your research beforehand to ensure you’ve met the eligibility requirements and have the necessary documents, you’ll increase your approval chances on your credit card application.
- Applying for several cards in a short time period. If you’ve been rejected for a credit card, don’t apply for another one right away, as this may put a mark on your credit file. Instead, do some research to figure out why your application was denied. If you didn’t have all of the correct documents, make sure you have all of the most recent versions of them when you apply again in a few months. If you were rejected because of your credit score, you can work on increasing your score to better your chances of approval.
Bottom line
If you’re self-employed, you should have no trouble applying for a credit card as long as you prepare beforehand. If you meet the eligibility requirements and have the right documents on hand, you will increase your chances of approval. Before applying for a credit card, make sure you compare your options in order to find the right card for your financial needs and spending habits.
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