Empowering the Freelance Economy

Credit score myths busted: how to best manage your credit score as a freelancer

Having some debt helps your credit history, but managing it is the key to a good credit score
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Research from YouGov has found that 17% of adults in the UK are rejected credit products. However, the primary cause for this is most likely a lack of knowledge regarding credit and how to manage it. Through the spread of misinformation, myths have arisen which have not been corrected or clarified to the general public.


One of the biggest and most widely believed myths surrounding your credit rating is that there is a universal blacklist distributed between lenders. This is just not true, as Drafty’s VP of customer and proposition Andrew Weyland, explains, “Each lender decides based on their own criteria and risk levels.”

This means that freelancers can use these criteria to empower themselves and improve their credit score, in turn, improving the likelihood of them being accepted when applying for credit products.

Another widely believed myth surrounding credit health is the idea that checking your credit score is harmful, according to the credit line company.

In reality, checking your score is merely recorded as a soft search which is not visible to lenders, and has no effect on the score itself. Knowing this is a crucial insight that means freelancers can manage and understand their credit score. However, applying for different forms of credit in a short period could have an impact.

He advises spacing out credit applications by at least three months, as applying for too many credit products in a short period can signal financial trouble to lenders. “Each application causes a temporary dip in your score,” he says. “If you make multiple applications in a short time, those dips add up.”

Another myth to clarify according to Weyland is most people also assume their income has a direct impact on their credit score, this is not the case. Your income is not displayed on your credit score and is not considered important, instead what is influential on your credit score is how you manage credit in comparison to your income.

Understanding your Debt to Income (DTI) ratio is also very important when it comes to understanding and managing your credit score. A DTI ratio is simply the percentage of your monthly income that goes to paying off your debts. Lenders will look at this to determine your ability to repay loans. Typically, the lower your DTI score, the better. For reference, most lenders are looking for a DTI ratio of 36% or lower.

Credit expert Andrew Weyland shared some tips to ensure your credit score is as good as it possibly can be. These tips include:

  • Registering for the electoral roll. This is a quick and easy way to verify your identity and address with lenders. It is also a must for mortgage applicants.
  • Ensuring bills are paid on time. Setting up direct debits for your minimum bills is a good way to guarantee that you won’t miss any bill payments. This is very important as payment history makes up a large portion of your credit score. For freelancers, this means making sure clients agree to your timely payment terms. Asking for a deposit in advance of working also helps.
  • Keep credit use below 30%. Not using the maximum credit allowance you receive is a good way to show good credit management habits
  • Keep old accounts open. This is important for maintaining a strong credit history, as even if you don’t use these accounts often, they will contribute to your overall credit history

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