Employment status when applying for credit?

[kaiser78]

I just wondered what others put when applying for things like a new credit card as their employment status?

Would you put yourself as employed or self employed?

Also would you put your income as total of salary + dividend for both options?

From one 78 to another, never say you are self employed as this suggests plumber, newsagent etc etc, income being more cash based. Put yourself down as employed, the company you are employed by being your ltd company, with monthly combined salary/dividend earnings.

[VectraMan]

From one 78 to another, never say you are self employed as this suggests plumber, newsagent etc etc, income being more cash based. Put yourself down as employed, the company you are employed by being your ltd company, with monthly combined salary/dividend earnings.

Maybe to most "self-employed" better describes what we are, but I think "self-employed" has a specific meaning; i.e. sole trader. And we aint one of them.

Though I wonder if they then do a credit check on your employer and discover that you work for a pokey one man company with no assets and one customer.

[FrontEnder]

You need to be careful with dividing total income by 12 (not sure that there’s much of an alternative, but understanding why might help). A lender should seek to demonstrate that the repayment of any credit facility they have extended is affordable. One way to do this is to validate the customers declared income with a reference agency (CallCredit’s Affordability Report, for example). This will look at monthly turnover of your current accounts and return an indication of whether they can see the money the applicant declared or not (also within 10% iirc). The upshot is that if you’ve taken your dividends in April, bought a new car and spend the rest of the year living on beans it’s going to be difficult for a CRA to validate your income based on recent data. Just something to be wary of.

This probably isn't a reliable check though, so I doubt they would decline based on this. So if that didn't give them the information they needed, they'd probably ask to see bank statement.

[barrydidit]

This probably isn't a reliable check though, so I doubt they would decline based on this. So if that didn't give them the information they needed, they'd probably ask to see bank statement.

Dunno the policy of all lenders, the specific one i'm on about would indeed refer (rather than decline) the application but you'd still have to demonstrate affordability before they would lend. What i'm saying is that splitting an annual income into 12 equal chunks might not just fly through the system unchallenged.

[FrontEnder]

Dunno the policy of all lenders, the specific one i'm on about would indeed refer (rather than decline) the application but you'd still have to demonstrate affordability before they would lend. What i'm saying is that splitting an annual income into 12 equal chunks might not just fly through the system unchallenged.

Oh yes, I agree.

Having the freedom to choose when and how much to pay yourself can also be an advantage here.