Self-Employed? Here’s How To Boost Your Credit Score

Self-Employed? Here's How To Boost Your Credit Score

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Being self-employed is fantastic because you are the boss, and you decide when to work, whom you work for, and how much you earn while controlling every aspect of your business.

However, the only downside to being self-employed is that financial institutions hesitate to lend you money. Why? The answer is simple: they don’t see self-employed people as having a stable income and, thus, are more likely to default on their obligations.

Thankfully you can boost your chances of getting loans, mortgages, and credit cards through a few simple concepts and tips. Here’s what you need to do:

Keep On Top Of Your Record-Keeping

You are legally obligated to keep clear and consistent records for your business – even if you’re just a freelancer without a bricks-and-mortar shop.

The good news is that you can use software like QuickBooks to help you record all financial transactions and upload copies of receipts and invoices.

Of course, keeping paper records as a backup makes sense if you have any issues with your online bookkeeping software. Plus, finding any information can sometimes be quicker if you’re offline.

Launch A Limited Company

You might think that running a limited company is overkill if you’re the sole employee and only work as a freelancer or a part-time self-employed person. But while it means higher overheads for your business, it will also mean better chances of getting credit.

As a company director, you also get classed as an employee. What’s more, your business’s financial information is publicly available, making it easy if you’re looking at mortgages for self employed people, for instance.

Make sure you hire an accountant to help you operate your limited company in the most tax-efficient way possible. Many people find they pay less taxes by having a limited company instead of operating as a sole trader.

Pay All Your Bills On Time

Never over-commit yourself financially. If you can’t afford to pay for something with a loan or credit card, saving up the money and buying it with cash instead makes sense.

It would help if you also looked at ways of increasing your income so you can be sure that all your bills will get paid on time and that you’ll have some money left over for emergencies or one-off purchases.

Use Specialist Lenders

One final tip for you to consider is contacting specialist lenders. Whether you need a loan or mortgage, using a provider that tailors its services to the self-employed means you’ll have a higher chance of getting accepted for the finance or capital you need.

That’s because those financial institutions will consider self-employed income stable – provided you can prove that you earn more than you spend and have savings for a rainy day.


Boosting your creditworthiness by following the above tips and tricks will give you access to more financial opportunities.

A solid credit history is undeniably the foundation of appearing creditworthy, but you should also ensure you can prove your business is profitable and support yourself easily.

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