If you’re self-employed, a credit card can help you better manage your expenses. Use our table below to find the cards you’re eligible for, based on card type.
Yes, and being self-employed in itself won’t necessarily impact your chances of being approved for a credit card. If you’ve been in business for a while, have a regular cashflow and a good credit score, you’ll probably be eligible to apply for most credit cards on the market.
However, working for yourself normally means irregular earnings and a lack of stability – two things lenders usually aren’t a big fan of. That means that your first credit card could be harder to land, especially if you’ve only been working for yourself for a short time.
The good news is, almost all card issuers now offer an eligibility checker, so you can find out your chances of getting approved before you apply (and without hurting your credit score). You may find that you stand a good chance of getting approved for the card(s) that you’re after, but that you’re offered a different rate to the advertised representative APR – which card issuers are only obliged to award to 51% of their customers.
You should do all you can to look improve your credit score and be even more careful with providing accurate information and documents to prove how much money you make (and how much you can realistically afford to borrow).
Being self-employed requires a series of impressive skills – one of which is a very solid ability to manage and organise your finances, right down to the last penny.
When it comes to business expenses, there’s clearly an advantage to using a dedicated card on a dedicated account – which will make your accounting much easier than if you were to mix your personal and business expenses. And opting for a credit card can boost your spending power and potentially even earn you some rewards along the way.
Unfortunately, there’s no secret recipe that gets self-employed people (or anyone else, for that matter) approved for a credit card. But there are some good practices you should follow:
This is what you can do in the short term, that is, if you need a credit card right now.
However, being self-employed, it’s also a good idea to plan for the long term. If you don’t necessarily need credit right now, but have no credit history in the UK, keep in mind that you’ll probably need it at some point, maybe in the form of a mortgage for your house or a loan to refurbish your office.
So give yourself an early start, for example, by getting a credit card for people with limited/bad credit. Only use a small portion of your credit limit and pay off your credit card bill in full every month. Most cards on the market won’t charge you a penny of interest provided you clear your balance each month. By the time you actually need money, your good credit score will hopefully allow you to get a competitive card or loan without too many difficulties, even if you’re a freelancer.
It might. Don’t forget that the APR (annual percentage rate) you see on lenders’ websites is representative. That means that at least 51% of the people who get that credit card will get that interest rate, not that everyone will get it. You may be offered a higher interest rate if your irregular earnings make you look like a risky lender. Credit limits (that’s the maximum you’ll be able to borrow using the card) are also tailored to the individual. If you’re just starting out, you might be offered a relatively low limit initially.
However, this doesn’t automatically translate to a higher cost. With almost all credit cards, when the bill is paid off in full every month, the interest rate isn’t really an issue, because it won’t be charged. If you do that and also pick a credit card that doesn’t charge an annual fee, the whole thing could come in at no cost to you.
Like we said, don’t panic, and regroup instead of applying for another card straight away. Here are a bunch of alternative products you might be interested in:
Don’t be fooled into thinking that it’s impossible to get a credit card just because you’re self-employed or a freelancer. On the contrary, if you’ve been your own boss for at least two years, have regular money coming in and a decent credit rating, you may find you can take your pick from what’s out there.
However, if you’ve only just started working for yourself and your credit rating could be better, lenders might be a little more cautious of you.
Check your credit rating and look for ways of improving it. Then make full use of the eligibility checker that many credit card companies will offer. You’ll be able to get instant decisions, which shouldn’t harm your credit rating further.
Make sure you check the lenders eligibility criteria before you apply. Some credit card providers exclude those who are sole traders, freelancers and self-employed.
Use our calculator to find out how long it would take to clear your credit card balance by making the minimum required payments vs paying a fixed amount each month.
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