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Credit cards for the self-employed 

Can I get a credit card if I am self-employed? 

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Written by  Ella Jukwey
5 min read
Updated: 26 Jan 2023

When applying for a credit card, you will have to provide details of your salary. This might be a bit trickier to do when you’re self-employed and your earnings fluctuate.

What does it mean to be self-employed?       

If you work for yourself in the UK, you’re classed as a sole trader, regardless of if you’ve let HMRC know. You’re normally self-employed if you run your own business, sell goods and services, or have set up your own limited company.

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Is it possible to get a credit card if I am self-employed? 

Yes, you can get a credit card if you are self-employed. However, you might find applying for a credit card as a self-employed person trickier than someone who is an employee. The reason it can be harder for self-employed people is that lenders may consider you high-risk as you might not have a steady regular income.  Someone with a fixed salary may be seen as a lower risk because they’re guaranteed to get a certain amount of money on a regular basis.  

What to consider before applying for a self-employed credit card 

Fluctuating finances: As a self-employed person, you might not have a set salary, instead, you could have varied earnings. This could be a cause of concern for the lender because if your income is irregular this could mean you may struggle to keep up with card repayments. It’s important to remember that the lender wants to know you can comfortably afford your credit card.  

New to self-employment: If you’ve only just become self-employed this might also make it harder to be accepted. If you’re new to working for yourself, you won’t have a history of running a successful and stable business and this can make it harder to predict how much money will be coming in.  

Debt: It is normal for businesspeople to take out loans when starting out, however, this means you’ll have money you’re in the process of paying back. Because you’re already borrowing money from someone else this can also make the lender more worried about if you can keep up with repayments. 

Credit score: Simply put, the better your credit score the easier it is to get accepted for a credit card. If you have a bad credit score in addition to working for yourself, this can be less attractive to lenders. However, you may still have options with a specialist bad credit card. 

What information will I need to apply for a self-employed credit card? 

When you apply for any credit card, you’ll need to provide proof of identity, address and income. You’ll still need to supply these details for your self-employed credit card, alongside these additional documents: 

Proof of income: As a self-employed person, you’ll need to provide documents that show your income in the past two years. The documents could be a tax return or a profit and loss statement, as long as it shows you have a steady stream of income. 

Savings: Because the money you make monthly can vary, showing your savings can the lender you can manage your money. Savings can be a good supporting document as it shows you have the backup and could keep up with your credit card repayments.  

Details about your business: This could be your Companies’ House number and proof that your business is based in the UK. 

What types of cards can I get if I am self-employed? 

There are many different types of credit cards available and being self-employed by itself shouldn’t be a barrier to getting one. However, your credit score and income will play a part in you being accepted.  

If you don’t have the best credit: If you have a low credit score, you may find it easier to get accepted for a credit builder card. These cards work by helping you build up your credit score and are designed for people with lower credit scores. Be aware that these cards come with higher interest rates and lower credit limits. 

How do I choose the best self-employed credit card? 

The best self-employed credit card will depend on your circumstances and what you need it for: 

If you want to consolidate debt: With a balance transfer card you can move your current credit card balances onto a low-rate or 0% rate credit card. This allows you to consolidate your debts and pay them off faster at a lower or even 0% rate. The drawback with this type of card is that you’ll have to pay a balance transfer fee. Also, if you don’t pay off the debt by the end of the low or 0 per cent introductory rate period, the interest rate will rise and be significantly higher. 

If you’re a frequent spender: If you shop a lot, then a rewards credit card could be a savvy choice. With a rewards credit card, you can earn rewards such as cashback and airmiles, with certain purchases. These cards can come with high standard rates and, as always, it’s important to pay off your monthly balance in full. 

Don’t have good credit: Although they don’t have a credit limit, credit-builder prepaid cards are an option if you have bad credit. A credit-builder prepaid card works by being loaded with money whenever you need to use it. These cards charge you a monthly fee and work more like a loan. 

Can I get a credit card if I have a start-up business?  

Yes, you can get a credit card if you have a start-up business. But it’s important to remember that because your business is new and may not have an established history of trading, it can make you seem a higher risk to lenders. 

How can I build and maintain a good credit score? 

The good news is that if you don’t have the best credit score it can be fixed. With some patience and practising good financial habits, your credit score could soon be on the up. 

Here are some tried-and-trusted tips that’ll help you boost your credit rating... 

Register on the electoral roll: Registering to vote is a small step that can help boost your credit score. You can do this by registering on the GOV.UK website.  

Keep up with payments: One way to show lenders that you’re responsible is by keeping up with bills. Make sure your bills are paid on time e.g., your phone contract. It’s also vital that you keep up with your credit card payments. Failure to do so risks getting into debt and costly fees. 

Close any old accounts: Inactive credit accounts you no longer use can lower your credit score. Closing old credit accounts can help with boosting your rating. 

Reading our guides: Our handy guide on how to improve your credit score can also give you in-depth tips on how to mend your credit rating. 

What happens if I miss a payment on my credit card? 

You should always strive to make the minimum credit card payment. However, missing a credit card payment can come with negative consequences, such as: 

A fee: You can face an instant ‘missed payment’ fee of about £12. That might not sound like much, but over time a series of missed payment fees can add up and be costly. 

Higher interest rates: Missing a payment can mean you miss out on a promotional offer,e.g. 0% interest rate for an introductory period. A higher interest rate means your card will cost you a lot more. 

Mark on your file: A late payment will be recorded on your credit report, which can seriously lower your credit score. If the late payment becomes a default or County Court Judgement, it’ll be much harder for you to borrow in the future. Marks can remain on your credit report for six years. 

Is a credit card right for me if I’m self-employed? 

A credit card can be a good idea for a self-employed person.  Here are some reasons why it could be right for you: 

Spread the cost: Credit cards help you spread the cost and can be useful when you’re working for yourself. Running a business can be expensive, so having a credit card can provide you with some breathing space. 

Protect your purchases: One of the biggest benefits of using a credit card is the financial protection it provides. Section 75 of the Consumer Credit Act protects purchases over £100 and under £30,000. This financial protection can be useful for a self-employed person because if any purchase for your business goes wrong you could be refunded. 

Boost your credit score: If you use your credit card wisely,e.g. keeping up with your payments, then it can raise your credit rating. A good credit score will make it easier for you to borrow in the future, such as taking out a loan or borrowing for a mortgage.  

A credit card may not suit you if: 

You find it hard to make payments on time: If you don’t make your credit card payments on time, you run the risk of damaging your credit score. With a bad credit score, you face higher interest rates and harder to borrow money in the future. 

If you want to use it for cash withdrawals: If you use your credit card for cash withdrawals, you’ll face fees. Consider a debit card instead if you’re looking to regularly take out money. 

You’re in financial trouble: If you’re already struggling with debt, a credit card may deepen your problems. It’s important not to borrow what you can’t afford to pay back as this can leave you drowning in debt. 

What are my alternatives to a credit card if I am self-employed? 

Credit cards aren’t the only way to borrow. Here are some alternatives: 

Taking out a loan: With a loan, you borrow money from a lender who is usually a bank or financial organisation. If you’re looking to apply for a business loan, there are various types of business loans available. You can apply for a long-term, short-term, unsecured, secured and even a start-up business loan.  

Overdraft: Overdrafts come with most current accounts and allow you to spend more money than you have in them. Overdrafts can help you cover short-term costs, however, they’re not a long-term borrowing solution and can incur costly charges. 

Other useful guides 

If you want to learn more about credit cards, MoneySuperMarket has a range of guides you can read: 

Credit cards for unemployed 

Business credit cards guide 

Can I get a credit card guide 

Compare credit cards with MoneySuperMarket 

It’s quick and simple to compare credit cards with MoneySuperMarket.  You just need to give us a few details about yourself and we’ll show you a list of credit cards suited to what you’re looking for. 

With our handy filters and tools, you can compare cards by their interest rate, rewards and your likelihood of being accepted. This means when you apply for a credit card with us, you can do so with confidence. 

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this service. Instead, we are usually paid a fee by the lenders, but the size of that payment doesn’t affect how we show products to customers.  

 

























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