Can you get a credit card if you’re self-employed?


Can you get a credit card if you’re self-employed?

Being self-employed can cause a lot of problems for your finances. It can make it difficult to budget if your income fluctuates from month to month and it means you’ll have to manage your own income tax payments. But will it affect whether you can get a credit card?

Credit card providers certainly look at how much you earn when they’re deciding whether or not to accept you and what rate of interest you’ll get. That doesn’t mean you can’t get a credit card if you’re self-employed though. Let’s take a look at what difference it could make.

Will it make a difference?

If you’re self-employed and you’re a homeowner, you’ll know how difficult it can be to get a mortgage. This is because some mortgage lenders will see you as more of a risk if you work for yourself or you’re a freelancer and your income changes every month.

You’re not likely to find it quite as hard to get a credit card if you’re self-employed as you would do to get a mortgage. But some credit card providers could still be relatively cautious if they think your income isn’t steady and you could struggle with your repayments.

You’ll just need to know your average monthly income. Not sure what this is? Just add up how much you earned in the last three months and divide it by three. If the last three months were particularly good or bad, you might want to do this over a different three months so it gives you more of an accurate figure.

Have you got bad credit?

If you’ve had problems managing credit in the past, this will show on your credit history. This includes defaults, CCJs and if you’ve been insolvent, such as if you were bankrupt. These will show on your credit history for six years so even if you had problems a few years ago, lenders could still see this if they credit searched you. It’s likely they would do this when you apply for any type of credit – be that loan, mortgage or credit card.

Having problems with credit could also mean that some lenders will be more likely to turn you down. When you’ve got bad credit on top of being self-employed, it could further cut the pool of credit card providers who are likely to accept you.

That doesn’t mean all lenders will automatically close the door if you’re self-employed though. While you might not be able to get all of the best credit card deals, you could still find a lender who will accept you.

How you could get accepted

The best way to make sure you can get a credit card – whether you’re self-employed or not – is to check your credit report and see if there’s anything wrong. You can do this through Experian, Equifax and CallCredit, though there’s a charge for the first two after a month. But you can check your credit report for free – check out our blog on Noddle and ClearScore to find out how to do this.

Once you’ve got access to your credit report, you should be able to see what the problems are. These could be relatively minor things – for example, if you’re not on the electoral roll, this can make it harder to get credit. You could also see missed payments, defaults or CCJs. If you want to boost your chances of getting credit, find out how you could improve your credit history in three months.

Another way you could improve your credit history is with a credit builder credit card, like the Ocean Credit Card. If you use it to borrow responsibly and pay back at least the minimum every month and stay within your credit limit, this could help to show lenders that you can stay in control of credit. But remember, not doing so could harm your credit rating further. And with our QuickCheck, you could find out if you’ll get it before you even apply.