September 30th, 2013

How to Build Credit as a Self-Employed Freelancer

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How to Build Credit as a Self-Employed Freelancer

**Today’s guest post is contributed by Carrie.**


Being your own boss has some great benefits, with one of the main ones being the freedom and flexibility to do with your time as you please. However, with that freedom comes a big obstacle — it’s difficult to build credit.

This is something I discovered after I quit my job in May 2013 and had to rely on my own income for stability, paying the bills, and of course, building credit.

Thankfully, you can still build credit as a self-employed freelancer by using these five unconventional strategies.

1. Collect proof to verify self-employment income

One of the main reasons it’s hard to obtain a credit card or loan as a freelancer is because it’s not easy to verify your income. It’s not like the financial institution can pull records of your W-2’s, because self-employment income is a lot more inconsistent.

However, if you’ve been freelancing for more than a year, you can use your past tax returns as a way to verify your annual income.

Another way to collect proof of self-employment income is to gather any bank statements and investment or savings account balances. If your business is doing well, or if you’re a smart saver, having a good chunk of money lying around can be used as collateral, and prove that you’re a solid candidate for loaning money to.

2. Authenticate your business by incorporating

If you’re interested in giving yourself a pay stub like a regular employee, you can incorporate or become an LLC. This will prove you’re serious about your business, and show that you’re running a legitimate business.

You’ll be able to pay yourself as an employee, and it will look as if you’re working for any other type of company to the lenders. Plus you can potentially qualify for certain tax benefits, so incorporating is worth considering.

3. Take out credit in the company’s name

After setting up the legal identity of your business, it’s time to open bank accounts, credit with vendors and even credit cards under the business’ name. Just like personal credit and bank accounts, any financial information you have will be reported to the credit bureaus.

So if you’re trying to establish credit as a self-employed business owner, there are major advantages to opening business credit versus credit under your personal name. You can even take advantage of promotional interest rates to pay for any business expenses. It’s a win-win to help with cash flow and your financial history.

Having no credit is better than having bad credit, so if your business is new you can start from scratch to build a solid credit history.

4. Use unconventional methods

You and WilliamPaid, you can build credit just by paying your rent, utilities, cell phone, insurance and other bills. These services have made it easy (and nearly free) for you to leverage your monthly bills to prove you’re a solid candidate for loans and other financial products.

Using debt to build credit is a thing of the past, so don’t be afraid to buck the trends and find your own methods for proof of income or payment history.

5. Keep your personal credit up-to-date

As a sole-proprietor (even one that’s an LLC), your personal credit history is tied to that of your business and vice-versa. So be sure to keep your report clean, check for errors regularly and pay your bills on time.

Your credit score is made up of five components:

  • Payment history — 35%
  • Amounts owed — 30%
  • How long you’ve had credit — 15%
  • New credit — 10%
  • Mix of credit products — 10%

As long as you keep each those top components in mind, you’ll be able to improve your personal and business credit score with very little issues.

If a loan officer sees you have a solid history of making payments on time and are able to control the amount of debt you owe, they generally will have no problem working with you and your business.

What’s another way you can build credit as a freelancer?


Carrie Smith is the owner and editor of Careful Cents, a blog that specializes in helping serious solopreneurs and full-time freelancers earn more money in less time through systems and financial organization. She also writes for The Huffington Post, AllBusiness Experts and several other business websites. You can find her on Twitter @carefulcents.

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.


  1. When I originally commented I clicked the “Notify me when new comments are added” checkbox and
    now each time a comment is added I get four e-mails with the same comment.
    Is there any way you can remove people from that service?
    Thanks a lot!

    Parchet triplu stratificat at 6:27 am on May 4, 2014
  2. Mike

    I’m sorry to hear that Parchet. We can’t do that on our end, so I’d suggest you send these messages to your spam folder in order to avoid getting these notifications in the future. Thanks!

    Mike at 4:30 pm on May 5, 2014
  3. I have had a business credit card, American Express, since 2007. This account has always been in good standing, never even late. I found recently, that this account has never shown up on my credit reports. I called the card company and they assured me that it has been reported regularly, since I’ve had it.
    My question is, why wouldn’t this be showing up? Is there something I can do to get it to show up? I even tried to add it to my Credit Karma accounts, but it keeps telling me that I can’t add it.
    Any help would be great.
    Thank You!

    Clifford Winters at 3:31 pm on January 1, 2015
  4. Mike

    Hi Clifford – Thanks for your question. All of our credit report information comes directly from the credit bureaus, so if this card isn’t showing up on your TransUnion or Equifax data, I’d recommend contacting them directly. Regarding your problem connecting this card to your Credit Karma account, I’d recommend getting in touch with our great member support team for help with this issue. You can find them here:


    Mike at 9:57 am on January 6, 2015
  5. I need to build credit for my company having a hard time doing this

    lisa at 6:10 am on January 7, 2015
  6. For freelancers a fact of life is that we will probably always be on the hook personally for business loans and credit cards. Several years ago a successful freelancer I know received a business line of credit ($100,000) in her company’s name after many years of using personal credit cards (using some for business and some for personal–always keeping them separate) to finance her business. Even after all of that, reading the terms and conditions closely, she discovered that this particular line of credit would not appear on her personal credit report–unless she fell behind on payments or defaulted on the loan…bottom line, she is personally responsible for the credit line.


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    Kristen at 5:32 am on February 27, 2016

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