I'm self-employed or have an irregular income

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Options for People with an Irregular Income

If you are self-employed or have a wage that could vary depending on commission, bonuses or overtime, it can sometimes be difficult to prove your income which can make it equally tricky to get a credit card. So how do you improve your chances of being accepted for a credit card?

Proof of income is certainly a factor that most credit card providers will take into account when deciding to give you a credit card and setting your credit limit. It is however just one aspect of the information they will consider before making a decision.

When you apply for your credit card, personal loan, mortgage, or any other form of credit, the lender will credit score your application using the information you provide in your application and data about your past financial behaviour, such as how well you managed your borrowings, held by Credit Reference Agencies such as Experian and Equifax.

So your Credit History of how well you’ve managed your debts in the past is often more important than how much you earn or how you earn it. The days of so called self certification – where you simply signed a piece of paper stating how much you earned a year – have long gone thanks to the credit crunch, but your employment status may not be as much of an obstacle as you think provided you have managed credit responsibly in the past.

A full time permanent employee will often get a higher credit score than a part time freelancer, but using the same bank for 10 years will gain more points than having an account for just one year. Anything more than three years at your current address also scores well.

If your credit score is high enough, you’ll be accepted for a credit card. If you don't score enough points, the lender may decline your application or they may offer you a smaller credit limit or charge you a higher rate of interest.

Different lenders use different criteria to decide whether to grant you a credit card. A poor credit score with one institution doesn't mean you’ll get a poor score with all of them. But there are a number of reasons that you might have run into problems that are not connected with your employment:

  • You haven’t been able to prove a regular or high enough income.
  • You may not have managed credit responsibly in the past, been late in making payments or missed them altogether. This information is stored on your Credit Record.
  • You may have gone over the limit of your credit cards, storecards or other credit accounts. This information will also be stored on your Credit Report.
  • You may have moved home recently or you’ve had lots of different addresses so the lender may not be able to verify the address details you’ve given them.
  • You are not on the electoral roll.
  • You have a CCJ against your name.

You can check your own Credit Record by following the instructions in ‘Checking Your Credit Record.’ Your Credit Record will show you the information that lenders can see when they view your record at the Credit Reference Agencies and will also help you to detect the early warning signs of identity theft. You may find that your low Credit Score isn’t a result of your self-employed status, but someone stealing your personal details to obtain credit cards using your name. If you don’t have access to a computer, you can write to the Credit Reference Agency which must reply to you within seven working days. If the information is wrong you can demand that it is changed or removed.

With self-employment it’s perfectly understandable that your cash flow may have suffered from time to time while you chase people for money they owe you and this may have a knock on effect on how well you’ve managed your credit cards and other credit commitments. If you know, or suspect, that your credit score is probably less than ideal, there are still providers that could help you obtain a credit card.

'Poor Credit History Credit Card' providers will still carry out a credit check, but they will take your circumstances into account and are willing to consider people with a less than good credit record.

Nothing is guaranteed with these 'Poor Credit History' credit card providers, but if you do have adverse data on your credit file they represent your best chance of getting the credit card you want. The interest rates on these 'Poor Credit History Credit Cards' are higher than usual and credit limits tend to be lower, but approaching these specialist lenders is a far better option than risking rejection (where a further search would be marked on your credit report) from mainstream credit card providers. These cards can also help you to build your credit rating back up over time by demonstrating that you can successfully manage credit.

Next Steps

  1. Check your Credit Record
  2. Make sure that all the information in your Credit Record is correct, and ask that it be corrected if it’s not
  3. Register on the Electoral Roll
  4. It might be good to consider a credit card provider that specialises in helping people with irregular income patterns or who are self employed
  5. Never give false details on applications

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