Employee or Freelance: Which Is Better for Your Credit Rating?
As the world is faced with new challenges, many employees realize that they might need to revisit their relationship with the workplace. Does it make sense to stay on as a full-time employee if you pay too much in tax? Does this help your credit rating in any way?
There are many solutions to optimizing your revenue stream, and going freelance might be one. Naturally, striking a better balance between how much you work and how much you earn can lead to a better credit rating. To get there, you need to consider several things about freelancing.
1. Is Freelancing the Right Career Move for Me?
In choosing to go freelance, the first question you ought to ask yourself is – do I have marketable skills? If the answer is yes, then freelancing is at least something to consider. While “marketable skill” might have a discriminatory ring to it, it’s not. Anything could be a marketable skill.
Whether you are a dentist or a contractor who knows their way around a house, you stand to gain if you manage to strike the holy trinity of freelancing, that is contacts, impeccable quality, and timely delivery.
Clients tend to gravitate towards individuals who are less bureaucratic and get the job done in a hassle-free manner. Therefore, freelancers are in fact a preferred choice – at least those who rise to the occasion.
Of course, as a freelancer, you can still work for, or be associated with a company. This is very common within certain types of industries especially when it comes to service providers like plumbers, Locksmiths and so on. These contractors are freelancers but operate under the roof of a specific brand like the Locksmithslocator to guarantee the security of both the freelancer and the customer who needs their services. This arrangement is a win-win for both parties. The customer only needs to call one company and not search for different contractors for when he needs a home locksmith or for when he locked himself out of his car. The company makes sure the customer always get professional service for the specific job he needs. The contractor on the other hand, is guaranteed to be sent to do the job he is best trained for, and get paid for the job he’s doing.
2. Assess Risk vs Gain
To effectively freelance, you have to ask yourself – is the risk you are taking enough to justify the gain. If you can earn what you would make at your current place of employment over a period of five years in a single year on your own, you might be better off taking that risk on.
Then again, there is also the nature of the job. What you do might need to be done in populated areas, as that would give you access to more clients. If you don’t have access to such areas and decide to go independent, you are likely to compete with your former employers for market share – or even clients.
Online professions such as artists, coders, and designers have a little more leeway because they are not necessarily tied to a single location to carry out their work. Freelancing is about being flexible.
3. Do You Have the Right Mindset to Freelance?
Psychology also plays a huge role in how successful you are likely to be as a freelancer. Some people require structure whereas others are good at keeping themselves in a track. If you think you will struggle with keeping work discipline – one of the reasons why so many companies don’t trust employees from home – you would need to work on this before stepping into new pursuits.
Freelancing can have benefits to those who have developed the correct mindset for it. Yet, even if you feel demotivated to work hard from home, the good news is you can still train yourself to be a more persistent and more importantly – consistent employee.
4. Respect Your Employers and Connect
Perhaps one of the most valuable qualities a freelancer might have is to be conscientious. Distance often means that an employer would mistrust you. Consistency and honesty will convince even the most skeptical employer that you are a reliable individual and a valuable asset to their team.
Of course, this doesn’t mean there are shortcuts. You will have to be there when your employer needs you as a freelancer. Even though working from home or a café could mean that you are “freer” in general, this doesn’t preclude responsibilities.
Put another way, you could have a flexible schedule, but the tasks you take on would need to be completed so that you can continue to build your profile as a trusted individual.
By now, you are probably wondering how all of that would influence your credit rating. It’s simple enough. By developing healthy relationships with your employers and boosting your overall income, you are bound to find more opportunities to save up, cover bad credit and generally launch yourself in a new lifestyle where your decisions about your finances would determine your future.
Remember to do it one step at a time and you will be able to find yourself a successful career as a freelancer1