This is a common query often asked in our FinTalks Facebook Group. I am listing the questions below:
The Questions:
- I have applied for a Credit Card as Self Employed and got approval. Can I apply for a new credit card as Salaried now?
- I have applied for a Credit Card as Self Employed and got approval. Now applied as Salaried and got declined. Is this because of an employment mismatch?
- I have applied for many Credit Cards as Self Employed till now and got approval. But for my next credit card, they don’t entertain self-employed applications unless they have a huge income. Can I apply as Salaried?
- If I apply for my first credit card as Salaried, does that mean all my Credit Cards have to be mandatorily applied as Salaried only?
- My first credit card was pre-approved and it is reported as Self-Employed in my CIBIL. Now I got a job and want to apply for another credit card. Can I apply as Salaried now?
- Is ‘Salaried’ or ‘Self Employed’ status permanently tagged on my CIBIL? Will I be in trouble if I keep interchanging them at my convenience?
There are many more queries, but mostly they are in the same line.
The Answer:
TLDR: Don’t worry. While Applying for a New Credit Card, you can switch between Salaried & Self-Employed as many times as you want.
Well, CIBIL and other Credit Bureaus works based on what data you feed them. Their algorithm and score determination work on what data they get from financial institutions about you. So, it will keep updating itself as soon as it gets new data regarding your employment status.
Now, the most logical explanation would be, that a person cannot remain ‘Salaried’ or ‘Self Employed’ forever.
There could be situations like:
- You had a salaried job, but you quit it and started a business.
- You were running your family business, but you suddenly got a job.
- You used to work at a company, but changed your company.
- You used to run a business, however, it collapsed badly and you had to take a job out of desperation.
Anything can happen in life, and it can change your track forever. What ultimately matters is your current employment status whenever you are applying for a new credit card.
Credit Bureaus will update it as soon as they get the data from your financial institution. You have absolutely nothing to worry about.
Bonus Tip:
If you are very meticulous about keeping your Credit Score pitch-perfect, then try to update your ‘employment information’ against all your lenders at once. This will ensure, that you will have no address mismatch against your credit profile. And thus your scores will have no impact on your employment status. (It can be impacted by other reasons, however, your employment status will not be a contributor)
But, practically speaking, this is unnecessary. Banks and other institutions understand that you can change jobs, or switch from employment to business anytime in your life, and they do not give it a high impact at all.
Simply put, you missing a credit card payment on time will decrease more points, than a mismatch in employment address on your Credit Profile. I guess you got my point. Also, refer to Factors that Affect your Credit Score Positively/Negatively to understand this properly.
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