Business Features

A freelancer’s guide to applying for a credit card

For the most part, being a freelancer has plenty of perks. Besides the benefit of working from home, freelancing opens the door to working with various lucrative clients. That said, there are also a few drawbacks that come with freelancing. Without an employer to provide proof of a stable income and other necessary documents, tasks such as applying for a credit card can be tough for self-employed professionals.

Because of this challenge, some freelancers believe that getting a credit card is simply not worth it. In reality, though, a credit card has a lot of uses. From verifying subscription-based accounts and payment profiles to buying plane tickets, credit cards deliver significant benefits to the average Filipino. On top of that, credit cards provide an ever-ready credit line when funds come up short.

If you’re working freelance and plan to get a credit card, you’ll need to prepare some additional requirements to support your application. Though they require a bit more effort, doing these steps can improve your chances of securing a credit card.

Register your business

Even if you’re not applying for a credit card, you still need to register as a self-employed individual if you intend to pursue freelance work as your main source of income. To start, you need to secure a Certificate of Registration (CoR) from the Bureau of Internal Revenue (BIR). Essentially, having a CoR allows you to file your Income Tax Returns (ITR) and pay taxes as a freelancer. Your annual ITR details your earnings, expenses incurred, and tax contributions—information that your bank needs to verify your eligibility for a credit card.

In addition to registering as a freelancer, you should also register your work with the Department of Trade and Industry (DTI). Because you act as both employer and employee, your work is technically considered a business. As such, it may be a good idea to secure a Certificate of Business Name Registration with the DTI.

Going through these extra steps may seem burdensome, but they are highly beneficial, and not just for credit card applications. Your registration documents can also help you in matters such as applying for loans and securing visas for international travel.

Prepare your proof of income

Now that you have your registration documents, you must submit proof that you have a stable income. Apart from your annual ITR, you need to prepare secondary documents that the issuing bank may ask for during your credit card application. While full-time employees have the benefit of easily securing a BIR Form 2316, a job contract, and a certificate of employment, freelancers need to rely on clients to prepare documents such as invoices and service agreements. 

Some clients provide their freelancers with payslips that have comprehensive details and payment breakdowns. In addition, some freelancer-focused online platforms have features designed to itemize details such as client billings and receipts of payments. However, payslips and invoices can be difficult for banks to verify, especially if you work with international clients. For this reason, the most reliable document to submit as proof of income is still your ITR. 

In addition to your proof of revenue, it would be a good idea to prepare bank statements dating back at least three months.

Maintain your bank account

Generally, banks need to make sure that your other accounts are in good standing before issuing you a credit card. If you have been with a bank for quite some time, deposit regularly into your account, and maintain a high enough Average Daily Balance (ADB), you may be pre-qualified to get a credit card with that bank. Usually, the bank will reach out to you to inform you that you’re eligible for a credit card with them. Once you’re pre-qualified, submitting requirements becomes less of a burden. As such, it’s usually more advantageous to apply for a credit card at a bank where you have a long-held savings account to serve as collateral.

If you haven’t received a notification yet from your bank, you can still reach out to them to request an endorsement. You can discuss your need to apply for a credit card and coordinate with them on forms and verification procedures. 

Consider getting a secured credit card

Unlike regular credit cards, secured credit cards are often easier to apply for. Although they function similarly to regular credit cards, secured credit cards differ in that they require you to deposit a certain amount before accessing your credit line. Before issuing a secured credit card, the bank may require you to open an account to hold your deposit. The bank will use this deposit as a guarantee in case you are unable to pay your debt. Basically, you can’t withdraw this amount until you opt to close your account and settle the balance on your card. Most of the time, your credit limit is 80–90 percent of the deposit amount.

Because your hold-out deposit already serves as collateral, you have a good chance of being approved for a secured credit card. This means you don’t have to submit documents such as bank statements and your annual ITR. Over time, you can ask your bank to convert your secured credit card into a regular one, provided that you maintain a good credit score.

Become a supplementary cardholder

If you don’t mind not having your own credit card, you have the option of becoming a supplementary cardholder instead. Simply put, a supplementary cardholder serves as a secondary user of an existing credit card. If you have a partner or other family members with a credit card, you can become their supplementary cardholder to enjoy the benefits of the account without needing to submit income-related documents. Do keep in mind, though, that the principal cardholder controls how much their supplementary cardholders can spend.

Credit cards for freelancers: Tough but not impossible

Securing a credit card is undeniably harder for freelancers, but that doesn’t mean this goal is out of reach. With a few strategies and knowledge of what to prepare, freelancers can get approved for a credit card and start enjoying all of its perks. Even if you don’t yet feel the need to own a credit card, it’s a good idea to start the application process. In this way, you have enough time to follow the tips above and have a secure credit line ready for when you need it. 

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