personal and business credit?

dylanj_2

Hello all, first timer here so please be nice

I'm 19 going on 20 next month, have been self-employed sole trader for about 8 months now, have a business bank account with overdraft facilities and a business credit card, all with Natwest.

I have a personal Lloyds account with overdraft and a credit card with them too. As a part of my member benefits with the account fee I pay monthly, I get unlimited credit reports from Callcredit.

I've been watching my credit rise for a few months, which is coming along nicely. I've never missed any payments, got a capital one card additional to this, though its 34.9% apr so quite a bit higher than my others.

Anyway, the question I have is, I have been spending on cards for a while now, trying to build up my credit as much as I can for the future, but my business accounts have yet to show up on my report.

I had a personal account with natwest for years, then moved to lloyds. This shows on the report as Settled. But no other Natwest accounts appear.

Can anyone shed some light on this? (Sorry for the essay lol)

gglaze

My business accounts also don't show up on my personal credit report. I would guess this is normal?

I have HSBC, and my business is a Ltd Co, if that makes any difference.

Tixy

Some of your accounts could show on just your experian or equifax reports rather than callcredit (not all lenders report to all credit ref agencies),

But it is possible that your business accounts won't ever show up on your credit file. Though they could as you are a sole-trader.

InsideInsurance

gglaze wrote: »

I have HSBC, and my business is a Ltd Co, if that makes any difference.

This makes the world of difference because as a Ltd it is its own legal entity and therefore has its own credit rating etc. As a sole trader the OP and "their business" are legally one and the same.


My sole trader activities never appeared on my personal credit file but then I never had any credit attached to them. Ultimately CRA files are fairly optional for institutes to report to and it may well be the case that for sole traders most banks dont bother to report.

gglaze

Thanks. Off topic, and forgive my ignorance..

But just a quick question: what is the advantage of setting up a Sole Trader business as opoposed to a Ltd? Is it just easier/quicker? I assume from a tax point of view, and also from a liability point of view, it is less advantageous, right?

InsideInsurance

gglaze wrote: »

what is the advantage of setting up a Sole Trader business as opoposed to a Ltd? Is it just easier/quicker? I assume from a tax point of view, and also from a liability point of view, it is less advantageous, right?

Namely it is quicker and easier. Some would argue that not having to disclose your financial affairs to the world is a good thing but then you can do this via an unlimited company too (Martin Lewis Ltd became an unlimited company for this very reason - some felt it wasnt good for an unbiased money saving website to be making "millions" in profit from their unbiased advice etc)

Technically liability is one of the disadvantages of being a sole trader however a Ltd doesnt given 100% protection either as directors can be held personally liable for the miss management of their Ltds (hence why D&O insurance exists) plus for vSMEs directors are often required to give personal guarantees due to the ease of dissolving a Ltd

Tixy

gglaze wrote: »

Thanks. Off topic, and forgive my ignorance..

But just a quick question: what is the advantage of setting up a Sole Trader business as opoposed to a Ltd? Is it just easier/quicker? I assume from a tax point of view, and also from a liability point of view, it is less advantageous, right?

That could be a very long topic on its own. One of the key advantages is that you do not have to file public accounts or an annual return.
As you say from a liability point of view a limited company is usually preferable (although often banks / other creditors will required a personal guarantee from shareholders/directors anyway) and usually a limited company is preferable for tax purposes (although not always e.g. not always if your business is making losses and you have also have other taxable income).

dylanj_2

Thanks for the swift reply all. I wouldn't have thought it would show up on a Ltd company anyway, as someone has said, the business has its own identity so to speak.

I understand what everyone is saying, but surely I must be building up a credit file while lending? I mean, otherwise, in theory, couldn't I miss all my payments with the credit card and not be affected?

And I was told when looking into small business loans that they'd want to look at both my business and personal credit.

Very confusing

Tixy

I understand what everyone is saying, but surely I must be building up a credit file while lending?

No lender has to report to a credit reference agency. Its not unusual for sole trader business accounts not to appear (or they could appear on a different agency report).

I mean, otherwise, in theory, couldn't I miss all my payments with the credit card and not be affected?

But you might well find if there was something negative to report -e.g. missed payments or a default that they would start to report at that point. That might not feel very fair, but lenders are able to do that.

InsideInsurance

dylanj wrote: »

I understand what everyone is saying, but surely I must be building up a credit file while lending? I mean, otherwise, in theory, couldn't I miss all my payments with the credit card and not be affected?

And I was told when looking into small business loans that they'd want to look at both my business and personal credit.

For one, there is no "business", as a sole trader there is only you.

As to missing all payments.... well that lender will know that you've missed all your payments so wont really need to go to a credit reference agency to find that out in the future. As to other lenders (AKA their competitors) are they really that bothered if a competitor gives you money and you dont pay them back?

CRAs are a bit of an oddity as arguably they go against the normal business sense as they help your competitors and dont do much to help you. Go back in time and they were more useful as they helped track an individual but the datawarehouses banks have now are much more sophisticated and much more able to track one person when they move address, abbreviate their name etc

lawstudent

dylanj wrote: »

I have a personal Lloyds account with overdraft and a credit card with them too. As a part of my member benefits with the account fee I pay monthly, I get unlimited credit reports from Callcredit.

You do know those credit reports are free at https://www.noddle.co.uk don't you?