Ask Roland a Question

Hi, I’m the site founder and I will personally answer your question within a business day.

By submitting this question you agree to our privacy policy.

Can You Apply For A Credit Card When You’re Self-employed?
Smart Money

Can You Apply For A Credit Card When You’re Self-employed?

Last updated

Having a credit card can offer all kinds of benefits. You can use it to manage your cash flow, allowing you to buy the stuff you need now, to then pay it off later. You can use it to build your credit score, making it easier to apply for heavier duty credit in the future, such as a home loan. And of course, there are all those lovely extras credit cards can offer, giving you access to perks and rewards as you use the card day-to-day.

Sounds good, right? Ready to apply? Unfortunately, that’s where things can get a bit tricky – for some applicants, at least. If you have a steady job with a good income, if you have good credit and are financially secure, if you don’t have heaps of debt in your name, then applying – and getting approved – for a credit card should be no big deal.

If you sit somewhere outside that box, however, finding approval may be more of a challenge. In this post, we’re going to investigate the employment and income aspect of getting approved for a credit card, looking specifically at what it means to get approved when you’re self-employed. From tips on how to improve your chances of approval, to what to expect when you apply, we’ll cover all that – plus, how to more efficiently manage your card once you start using it.

Want to apply for a credit card when unemployed? We’ll look at that too, including what it means to apply when you’re unemployed, on Centrelink, or earning any other form of income outside of that typical ‘employee’ status.

How To Improve Your Chances of Approval

First though, let’s get into how you can improve your chances of getting approved for a credit card when you’re self-employed. In this section, we’ll look at the various tips you can employ to make your application run smoother, to then get approved for a card that will work well for your situation.

      ✓ Check your credit

When you’re self-employed, having good credit should go a long way towards getting approved. With good credit, you not only demonstrate your ability to repay, you also establish how responsible you have been with credit in the past. This essentially works to lower the risk for the card provider, making you a more appealing candidate.

There are a few different ways you can check your credit. A good place to start could be to go direct to Australia’s three main credit reporting agencies to apply for a copy of your credit report. Experian, Equifax and illion all allow you to access a copy of your credit report for free, with two offering easy online access, with a few handy tools thrown in as well.

Depending on the agency, you may be restricted in the number of times you can access your credit report each year without paying a fee. If keeping close tabs on your credit is important, you may choose to pay a fee for continuous access, alongside more of those credit-relevant tools.

Alternatively, you could check your credit using a third party provider. Again, some may charge a fee for this process. Before signing up, read the terms to find out how your data may be used by this third party, while also checking which reporting agency it uses to draw your information from.

TIP: When you check your credit before applying for a credit card, it’s a good idea to gain access to your credit report from all three reporting agencies. Why? You don’t know which reporting agency the card provider will use. There could potentially be errors on one credit report and not the others, which left uncorrected, could pull down your credit score and your chances of approval.

      ✓ Understand your finances

Another factor the card provider will pay attention to is your finances. When you have a salaried position, you enjoy a regular paycheque. When you’re self-employed, your pay be somewhat more sporadic. There may be months when you’ve got money coming in left, right and centre; and there may be leaner months, when the money you have coming in is much more sparse.

What the card provider wants to know is that you’ll be able to repay the money you spend on the card, regardless of whether you’re going through a lean period. Your credit report should help with this, especially if you have a history of always making your repayments on time. However, you will also need to provide evidence of your financial circumstances.

Before you apply, create a budget detailing exactly what you have coming in, and what you have going out. Prove to yourself first that you will be able to make your card repayments, before you attempt to prove this to the card provider. You can make your case more appealing by paying down other debts before you apply, and by building up your savings.

      ✓ Recognise your ability to repay

Consider how you will use the card before you apply. Will you use the card day-to-day, covering everyday expenses such as food and bills, just as you would use a debit card? Will you use the card to make large purchases? Or, will you keep the card for emergencies only?

Knowing what you will use the card for should help you choose a card that matches these needs, while also giving you a good idea of the credit limit you will need. If you opt for a high end card with a high credit limit, be aware that you will have to meet stricter eligibility requirements. These will come with a higher income requirement, and you will have to work harder to prove your ability to repay spending up to that higher limit.

On the other hand, choosing a more basic card with a lower limit could be easier to get approved for, especially if your income is more sporadic. It’s worth bearing in mind that you can start with a card such as this, and then work your way up the ladder by being a responsible cardholder.

      ✓ Gather your documentation

When you apply for a credit card when you’re self-employed, you will need to provide the standard documentation required by all applicants, plus a variety of additional information regarding your business and business income. Let’s start with standard documentation first, along with other information the card provider may ask for.

  • Proof of your identity. This could include your passport, driver’s licence or Medicare card.
  • Proof of address. This may be included on your driver’s licence, or alternatively on a recent utility bill.
  • Proof of your citizenship or residency status. This may be your passport or birth certificate, or your Australian citizenship certificate.
  • Proof of your current financial situation. This could include recent bank statements.
  • The value of any assets. If you own property, shares or other investments, you will need to provide the value of those assets.
  • The balance owing on any debts. You will need to provide details of the amount owing on any debts in your name, such as personal loans and car loans, as well as the amount owing and the available credit on any credit cards.
  • Your monthly or annual expenses. You will need to give an estimate of how much you spend within each category, for example, how much you spend on insurance or childcare each month.
  • Your annual income. For wage-earning and salaried applicants, this would be backed up with recent payslips and contact details for the applicant’s employer. For self-employed applicants, different documentation is required.

Each card provider has different requirements regarding the information and documentation self-employed applicants need to supply. Let’s take a look at what you may be expected to provide.

  • Your trading name, trading address and ABN. You may be asked to provide supporting documents to back this up, such as your most recent tax return, ABN registration certificate, or your trade or qualification certificate.
  • Your accountant’s name and contact details. This will be used by the card provider to confirm the information you provide. If you don’t have an accountant, you may be able to provide alternative supporting documents, such as copies of invoices issued, or payment notifications from customers.
  • Your tax info. You may need to provide personal tax returns and your Notices of Assessment for the past two years.
  • Recent financial statements. These may include balance sheets, profit and loss info, and business tax returns for the past two years (typically for small businesses, rather than sole traders).

Preparing your documentation in advance will not only make your application run more smoothly, it should also allow you to more clearly see where both you and your business stands with regards to what kind of credit card you can apply for.

      ✓ Read the small print

To reduce the chances of your application being rejected, you need to know whether you are eligible. Not all cards will accept your application if you’re self-employed. Other cards may have much higher income requirements, or may only approve applicants who have a super high credit score. You need to know what is expected of you as an applicant by reading the small print.

TIP: You may also need to have been in business for a certain number of years to be eligible to apply as a self-employed applicant. That may be one or two years, depending on the card provider. If you’re unsure, check with the provider before you apply.

      ✓ Choose the right card

Lastly, of course, you need to choose the right card. Taking into account the various other pieces of information drawn together already, you should have a good idea of the type of card you need, as well as the type of card you can afford. Now, it’s time to compare your options. Here’s a quick rundown of the various types of cards you can choose from.

  • Low Fee Cards: Choose a card with a low annual fee – or no annual fee – if you want to keep ongoing costs to a minimum on a basic card. These cards can also work well if you only want to keep a card for emergencies.
  • Low Rate Cards: Choose a card with a low rate if you think you may carry a balance. While it’s best to pay your balance in full each month, if that’s not going to be possible, paying a low rate is definitely better than paying a high rate.
  • Rewards Cards: Choose a card that earns rewards if you want to get something back on your spending – and you plan to channel a significant spend through your card. Rewards cards reward big spenders, but only those who pay off their balance each month.
  • Premium Cards: Choose a card with extras if you want to make use of perks either in your personal or business life. These cards typically come with higher income requirements and a higher annual fee.

 

Business Credit Card or Personal Credit Card?

As a business owner, you have the option of choosing either a personal credit card or business credit card for your needs. So, which one is right for you?

A personal credit card may be a better option if:

  • You’re just starting out. If you haven’t got an ABN yet, you won’t be able to apply for a business credit card. If you have an ABN but your business is still in its early stages – or you’re just using it as a side gig to supplement your income elsewhere – a personal credit card may be a better option right now.
  • You can easily separate your business and personal expenses. If you find it fairly easy to separate your business and personal spending come tax time, you may be fine with just having a personal credit card.
  • You have no employees. If you’re a sole trader and have no employees, you won’t need to worry about choosing a business card with supplementary cardholders.

A business credit card may suit you better if:

  • You expect your business to grow rapidly. A business credit card could provide you with the larger credit limit you’ll need to expand your operations while managing a larger flow of cash.
  • You have a number of employees. With a business credit card account, you can provide cards to trusted employees. Doing this, you can usually assign individual credit limits, while tracking spending using individual reports on each cardholder.
  • You want to make use of business benefits. Business credit cards can offer perks tailored to businesses, such as airport lounge access and upgrades when travelling on business. Business-orientated tools could also make budgeting for your business expenses easier as you use the card.
  • Your business accounting is more complex. When you use your business credit card for business spending and your personal credit card for personal spending, EOY calculations become easier to manage. Many business credit cards have expense reporting features built-in, helping to streamline the process even further.
  • You want to claim your annual fee as a business tax deduction. As a tool for doing business, it may be easier to claim your card’s annual fee, other fees and interest charges as a tax deduction if you have a dedicated business credit card rather than a personal credit card.

When To Hold Back on Applying

If you’re thinking about applying, but not sure if you should, here are some circumstances when it might pay to hold off on that application.

  • You’ve just started your business. If you have been running your business for less than two years, you may find it harder to get approved. Consider taking time to build up your business and establish your income before you apply.
  • You have bad credit. Under any circumstance, you will find it hard to get approved for a credit card if you have bad credit. Team bad credit with your self-employed status, and that approval will be even harder to come by. Work on building your credit over time, while paying down any other debts in your name. Building up a savings fund should also help your case.
  • You’ve had a few bad years. When you apply, card providers want reassurance you will be able to repay what you spend on your card. If your business has been suffering, your income probably has too. Consider taking time to rebuild your business earnings so you can prove your ability to repay when you apply.
  • Your financial documents are in disarray. If you’ve not been great at keeping track of your business documentation, or you’ve not filed your tax return in a while, you may want to hold off on applying for a credit card until you have everything in order. You will need to prove to the card provider you are a responsible business owner if you want to be approved.
  • You have recently been declined. If you recently applied for credit and had your application rejected, it would be wise to hold back on applying again. When you make multiple applications, you can seem desperate for credit – and hence, too much of a risk to lend to. Take time to address why you were declined, and wait for your credit to recover before applying again.
TIP: If you can’t apply right now, but still need access to credit, you could ask your partner, or a trusted friend or family member to apply in their name, and then add you as an additional cardholder. Bear in mind that as the primary accountholder, it’s their credit at stake, so only spend what you know you can pay back and be prompt with your repayments.

 

Time to Apply

Ready to apply? Here’s what you can expect as you apply for a credit card when self-employed.

Step 1. Compare cards

Use CreditCard.com.au to compare cards. You can check out the options within each category, to then narrow your options and dig a little deeper. Our handy comparison tool makes this faster and easier. Check out our reviews for each card to get a better idea of what it has to offer – and ask us any questions if you’re unsure.

TIP: Even if you find a number of cards you really like the look of, don’t make the mistake of making multiple applications. As we mentioned earlier, this makes you look like more of a risk, and may result in your applications being declined.

 

Step 2. Apply

When you apply via CreditCard.com.au, you will be directed to the card provider’s site to complete the online application. As you answer each question, be sure to answer truthfully and accurately, while providing complete information. If the information you provide doesn’t add up, has gaps, or looks suspicious, it will delay the application with additional checks and queries.

Make sure you provide accurate contact information, as the card provider may come back to you to ask for further details or documentation. If this happens, be as prompt as you can with the response. It’s also a good idea to let your accountant know about the application, giving them time to collect all relevant info before the card provider makes contact.

Step 3. Provide relevant documentation

As we covered earlier, you will likely have to provide more documentation being self-employed than you would if your were salaried. Find out exactly what documents you will need to hand over, then scan them and email them as directed. Being prompt with this should speed the approvals process along.

Step 4. Account Set-up

Once you’ve been approved, you should receive your card in the post within about a week. You can then activate the card and set up a PIN. If you applied for a balance transfer, this should be processed by your new card provider within the first few weeks from approval, after which point, it’s up to you to cancel the old card if needed, and start paying down your transferred balance.

Whether you opted for a personal credit card or a business credit card, familiarise yourself with the various tools on offer within the provider’s app or online banking set-up. You should also take time to look into the small print on any extras and rewards on offer, to make sure you make the most of them as you use the card.

Getting Approved When You’re Unemployed or on Centrelink

Okay, so we pretty much have self-employed applications covered. Now to whether you can apply for a credit card when you’re unemployed, or when you’re on Centrelink.

Getting approved for a credit card when you’re unemployed is significantly harder than when you have a job. But, that doesn’t mean it’s impossible. You may be able to get approved if:

  • You have regular income. If you receive regular payments from Centrelink, in the form of JobSeeker (formerly Austudy), Carer’s Allowance, Child Support Payments, Child Care Benefits, Centrelink long-term pensions, Parenting Payments, Foster Care Allowance or Family Tax Benefit A and B., you may be able to get approved for a credit card. If you’re retired, you may be able to provide evidence of income through assets, savings and superannuation, depending on your situation.
  • You find the right card. Not all card providers accept applications from unemployed applicants, no matter what form of income they have coming in. If you want to get approved, you will need to find both a card and card provider amenable to your circumstances. Opting for a basic, low cost card with low minimum income requirements may be your best bet.

Aside from your income, the card provider will also look at other factors, such as your expenses and liabilities, and your credit history. Being able to prove you are not a risk is important. That means having a good credit history with no missed payments, no defaults, and no out-of-control debts. Have all your budget and your documentation in place before you apply.

Be aware, there are no ‘no credit check’ credit cards in Australia.

TIP: Only apply for a credit card you can actually afford. If you are in a bad position financially, a credit card will only make your situation worse. If you’re struggling with debt, consider speaking to a professional, such as those on hand at the National Debt Helpline.

 

Top Tips for Using Your Card Responsibly

      ✓ Choose a credit limit that won’t land you in trouble.

      ✓ Know how much you can afford to spend and repay each month.

      ✓ Utilise card tools to limit your spending where needed.

      ✓ Track your spending by monitoring your transactions.

      ✓ Create a buffer fund that you can fall back on to make your repayments during lean months.

 
Photo source: Getty Images

Founder - Roland B Bleyer

Roland Bleyer

Founder of Creditcard.com.au. Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. This special offer has no annual fee first year, a low purchase rate and long 0% balance transfer. Have a look also at the huge 0% for 30 months balance transfer from Citi with no balance transfer fees.

Recently Asked Questions

Something you need to know about this card? Ask a our credit card expert a question.

Ask us a Question

Hi, we are here to help and will answer your question within a business day.

By submitting this question you agree to our privacy policy.

(showing the latest 10 Q&As)

Featured Balance Transfer Credit Cards

HSBC Platinum Credit Card – 0% Balance Transfer Offer

7 reviews
$0 saved over 36 months

St.George Vertigo Credit Card

19 reviews
$0 saved over 32 months

Citi Rewards Card – Purchases and Balance Transfer Offer

6 reviews
$0 saved over 14 months

Featured Rewards Credit Cards

12 reviews
points earned over 12 months

22 reviews
points earned over 12 months
Help us improve

By submitting this feedback you agree to our privacy policy.

My credit card is not listed

By submitting this form you agree to our privacy policy.