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Credit cards for the self employed

Compare credit cards for people who are self employed

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What are self-employed credit cards?

While there are no specific cards for the self-employed, some credit card providers will accept applications from self-employed people.

However, it can be harder to be accepted for a credit card if you’re a freelancer or run your own business.

Without the security of a fixed regular income, you can be seen as a higher risk to a lender. People considered a higher risk also include those with little or no credit history, low income or a bad credit history.

Are there different self-employed credit cards for sole traders, partnerships and limited companies?

There’s no distinction between credit cards for the self-employed. So, for example, you can’t get a designated ‘sole trader’ credit card.

However, if you want a credit card solely for business use, you might want to consider a business credit card.

The credit limit on a business credit card is typically higher because it’s based on your business income, not just your personal income.

Just like personal credit cards, there are different types of business credit cards depending on your needs. For example:

0% periods on purchases
Cashback on your spending
Balance transfers where you move debt from one card to another
Overseas use, which may be useful if your business takes you abroad frequently
Credit builder cards, which can help build your credit score if you use the card responsibly.

Any type of self-employed business can apply for a business credit card. It doesn’t matter if you’re a sole trader, in partnership or a limited company. That said, your business usually has to earn a minimum amount to qualify for a business credit card.

A business credit card will need to be taken out in your company’s name, not your own. But this does mean your business and personal finances can be kept separate so it’s easier to keep a track of your spending.

Please note that you can’t currently compare business credit cards with Compare the Market.

How do I know if I’m eligible for a credit card?

If you’re self-employed, many providers will consider how steady your income is. Others will be interested in your credit history – how successful you’ve been in paying off previous debt and whether you’ve missed any payments.

To see which credit cards you’re likely to be accepted for, use our credit card eligibility checker. It involves a soft search on your credit file, which won’t be visible to lenders and won’t impact your credit score.

Is it an issue if my self-employed income is variable?

Card providers are typically cautious offering credit to people without a regular income. While your total income for a year may exceed a provider’s required limit, having a few lean months could still decrease your chances of being accepted.

Providers will take the opportunity to see how much and how regular your income is. They’ll want to check you can comfortably afford the monthly card repayments.

Card providers will also consider other factors, such as the level of existing debt you have and whether you’re paying that back every month or missing payments.

Does it matter that I'm new to self-employment when I apply for a credit card?

If you’re new to self-employment, you may find it more difficult to get accepted for a card.

You won’t have a track record of generating business, so it might be trickier to predict what your income will be. You may also have taken out loans to get you started, meaning you’re already carrying debt – making you a less attractive prospect to a provider.

If you can wait a little longer and grow your track record, you may find it beneficial. But if you need a card now, then use our eligibility checker to see which cards you’re likely to be accepted for before applying.

What will I need to apply for a credit card if I’m self-employed?

If you’re self-employed, you’ll need to provide additional documents when applying for a credit card. These include:

Proof of income: you’ll typically need to show documents that demonstrate a steady income over the past two years. It can be a tax return, a profit and loss statement, or anything else that shows you have regular money coming in.
A good credit history: this shows lenders that you can manage debt effectively, by not going over your credit limit and keeping up with your repayments. The better your credit history, the more likely you are to be approved.
Savings: these can support your case by showing that you can manage your money, even if your income fluctuates throughout the year.

What if my credit card application gets declined?

Rejected applications may have a negative impact on your credit file. Your application might be declined if:

Your outstanding credit balance is too high
You have an unstable work history
Your annual income is too low
You have a limited credit history
There are late payment charges on your credit file
You’ve applied for credit too many times in a short period of time.

Read our guide to what to do if your credit card application has been declined before applying for another credit card.

What can I do to improve my chances of being accepted?

Before you consider applying for a card, check your credit report and correct any errors.

Then take steps to improve your credit score, if necessary. For example, register on the electoral roll if you haven’t already done so, and always repay any outstanding debts and household bills on time.

Avoid applying for multiple cards over a short space of time. This can suggest to lenders that you’re desperate for money and may damage your credit score.

Read our guide to building your credit score.

Do I need to tell my credit card provider if I become self-employed?

Probably not. But if you’re applying for a new card or to increase your credit limit, then you may be asked about your employment status.

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.

Frequently asked questions

Is it hard to get a credit card if you’re self-employed?

It can be a bit harder to get a credit card if you’re self-employed, but it’s certainly not impossible.

The main sticking point is evidence of a regular income. As an employee, you have a fixed salary. This acts as a guarantee that you receive a certain amount of money on a regular basis.

If you’re self-employed with a variable income, you’ll be considered a higher risk because your income levels will go up and down.

That said, if your credit report shows that you have a steady and reliable credit history, it should be easier to find a credit card provider who’ll accept your application.

Should I keep my personal and business finances separate?

It’s probably a good idea to keep the two separate. You’re personally responsible for your business debts if you’re registered as a sole trader or you’re a member of a partnership, so they’ll show up on your credit report and can impact your credit score.

However, it’s probably easier to deal with your finances separately when you’re doing your own admin. And you may want to apply for a credit card specifically for business use.

What’s the difference between a personal and business credit card?

There are a few differences between personal and business credit cards. These include:

Credit limit – most business credit cards offer a higher credit limit, which means you can borrow more than you can with a personal credit card.
Fees – most personal credit card providers no longer charge an annual fee, while most business credit card providers do.
Sub-accounts – if you have employees, business credit cards allow members of staff to have their own sub-business account, which you control under a single master statement.
Rewards – it’s easier to stack up the perks on a business rewards card if your spending is higher than on your personal credit card.
Use – business credit cards can only be used for business purposes, and not for anything personal.

Can a sole trader use a personal credit card?

Yes, as a sole trader you may not qualify for a business credit card, so a personal one might be your only option.

To qualify for a business credit card, providers may expect your business to be in operation for at least 12 months. They could also insist on a minimum business income before they’ll consider your application.