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How to get a credit card for self-employed workers

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If you are self-employed, run your own business, are an independent contractor or a freelancer it can be a little more complicated to get a credit card.

To make your search for a credit card a little easier, we’ve put together a bit of information on how you can navigate the application process and what you should expect to be asked for by potential card providers if you’re self-employed.

This will assist with additional expenses, especially if you’ve only just started on your path to running a successful business. Keep reading to find out what to expect when applying for a credit card.

Why do I need a self-employed credit card?

  • Spread the cost of small expenses
  • Protect your purchases
  • Improve your credit score

Having a credit card to use while self-employed can be very useful, especially in the early stages of setting up your business when there a lot of small expenses. Whether it’s stationery to note down orders, or cleaning products to keep your work environment spotless, there are always little extras that will threaten to reduce your bank balance.

Whilst there isn’t an exact credit card aimed at the self-employed, there are plenty of providers who will still accept you for credit even if you run your own business.

What are the benefits of getting a self-employed credit card?

  • Spread the cost of smaller expenses
  • Extra line of credit
  • Improve your credit score
  • Protect your purchases through Section 75

A credit card has other benefits, including the ability to gradually improve your credit score, as long as you’re able to stay within your limit every month.

You might find that a credit builder card will come in handy if you have struggled with borrowing in the past and would like to make improvements to your score for the future, without compromising your current cashflow.

You will also benefit from getting added protection from making purchases on your credit card, for items valued between £100 and £30k. This is down to Section 75 of the Consumer Credit Act, which outlines the way you can claim for a refund through your credit card provider if if a retailer shuts down or flat out refuses to give you a refund.

Find out more about credit cards in our article: getting your first credit card with confidence.

The problem with getting a credit card when self-employed

A credit card company, or any credit provider for that matter, will always want proof that you’re able to repay the amount you’ve borrowed. This usually involves you proving you have a regular income.

This can be a little different for those who’re self-employed, since your income may differ every month or might have changed in the last 12 months as your business has grown bigger. It’s all a bit more difficult to prove.

Therefore, it’s worth seeking out those providers who still accept someone who is self-employed, or have a financial product directly aimed at sole traders, independent contractors or freelancers.

What you will need when applying for a credit card

If you run your own business but would still like to apply for credit, you will just need to provide more evidence that your earnings are consistent. You may need to provide the following when you apply:

  • Proof of what you earn – either bank statements, a tax return or evidence from an accountant showing your profits on an annual basis
  • Proof of your business finances - some providers want at least 2 years of statements to show you’re earning money on a monthly basis, or they might need you to have a minimum turnover every month
  • Your business credentials – this might include your Companies’ House number and your Data Protection registration number
  • Proof that your business is based in the UK – this will simply be your UK address and any other applicable details

Unfortunately, some providers will simply reject you for being self-employed, as they will only accept those in regular employment. Instead of applying straight away, you’re best off doing some research and finding out whether the provider will accept you as being self-employed or not.

Find out your eligibility

Rather than applying directly for a credit card, it’s worth checking your eligibility first. If you fill out our moneymatcher comparison tool you will find out which credit cards you’re eligible for, or even find alternatives that will satisfy your borrowing needs.

You just need to provide a few personal details and you will get personalised options to suit your requirements. The best bit is that it won’t affect your credit score, unlike a rejection from a credit card provider, which could reduce it.

If you’d like to find out more about credit cards, head over to our credit card insights here.

Robert Bester