Self-employed workers ‘depending on credit’

Self-employed individuals are the most likely to be dependent on credit.

This is according to research carried out by the Personal Finance Research Centre at the University of Bristol. In terms of the three main types of credit – credit card, overdraft and personal loan – the number of people seeking debt advice was far higher for the self-employed sector.

As a result, they are more vulnerable to getting caught up in a debt cycle, which could threaten their jobs and standard of living. This is why individuals should always make sure they seek out debt help as soon as they think their problems have become unmanageable.

In 2012, the average credit card balance for all StepChange Debt Charity clients was £10,517, which is significantly lower than the figure of £17,237 for self-employed individuals.

This pattern is repeated across other forms of credit too, as when it comes to overdrafts, the typical value was £2,082 – and £3,615 for self-employed workers – while the average personal loan was £10,479, compared to £13,266 for self-employed clients.

Delroy Corinaldi, external affairs director of the charity – formerly known as the Consumer Credit Counselling Service – said: "While anyone, whatever their job or income, can find themselves struggling with debt, those working for themselves seem to be particularly vulnerable to debt problems.

"I would be particularly concerned about the strain of trying to seek enough work to maintain an income while struggling with debt. Anyone in this situation should not suffer alone, but seek professional advice and support."

The vulnerability of income for self-employed workers has been picked out as the main reason why they are more dependent on credit. Indeed, there was a six per cent drop in household income levels between 2011 and 2012 for those operating in this sector.

People who find themselves struggling financially should look at the various debt solutions open to them in an effort to bring their situation back under control.