Will applying for a basic account damage my credit rating?

The_pc_tech

According to Experian I have a good credit rating (yes I know these are only an indication)

I've banked with First Direct for a number of years.

Am working on my own business idea but it's going to take a while to get off the ground but to kick things off I'm going to need to rent some servers.

My intent is to apply for a basic account with HSBC (as I have history with them) to support the DD for the servers (with the money being transferred from my FD acvcount) while I set things up.

When I start trading I will of course convert it to a business account and transfer it to the company.

Question is, will this damage my credit rating or relationship with the bank as I know these accounts are often (but am sure not exclusively) used by people in financial difficulty.

If you are in such a situation, I hope things improve for you very soon by the way.

Any advice much appreciated.

KingS6

With these sort of basic current accounts, the provider usually does not perform a credit check against the applicant. I think there is just an identity check. So perhaps the conduct and existence of the account is not monitored by Credit Reference Agencies.

I'm not sure how this may impact your relationship with the bank.

Anthorn

You'll be using a personal basic account for business purposes which is not allowed by most banks. That's not what basic bank accounts are intended for. Be up front and tell them what the account will be used for. Otherwise if you get it it is likely to be taken away and that is likely to affect your credit especially if it's deemed to be fraud. Read the contrct.

EarthBoy

The_pc_tech wrote: »

When I start trading I will of course convert it to a business account and transfer it to the company..

You can't convert a personal account to a business account, or transfer it to a company. You'd have to open a new account.

KingS6 wrote: »

With these sort of basic current accounts, the provider usually does not perform a credit check against the applicant.

You're well out date, they do nowadays. Most banks reserve basic accounts for those with a poor credit history who can't get a standard current account. To ascertain this they carry out a credit check. If you pass the credit check you are usually offered a standard current account, not a basic one, on a take it or leave it basis.

On the HSBC website, on the page explaining how to open a basic bank account, it clearly tells you they will carry out a credit check:

Eligibility requirements

Are you happy for us to undertake a credit register search

https://www.hsbc.co.uk/1/2/current-accounts/basic-bank-account/open-bank-account?HBEU_dyn_lnk=CurrentAccount_BasicBankAccount_HowToApply_Btn?HBEU_dyn_lnk=CurrentAccount_BasicBankAccount_HowToApply_Btn

The_pc_tech

Thanks for the response all.

Nothing fraudulent intended, just didn't want to have to start paying business account charges while I was building out the supporting infrastructur as there's nothing to trade with until that is done, I am intending to run it in my spare time until turnover is such that I can pay myself a salary.

Sounds like I'm better off going to the local branch and having a chat with them?

Snakey

I know this is not what you were asking about but you could probably do with getting some tax advice as well. I've seen people get in a pickle over the distinction between themselves and their business, a sole trade and a company etc. It's not at all the same thing, even though it feels like it from where you're sitting, and ideally you should be clear on what it all means before you start.

10pence

Most banks will have introductory offers on business accounts where they don't charge for the first 12-18 months. And, depending on the turnover some won't charge for certain types of transactions; ie. all online transactions are free whilst cash over counter is charged for.

Regarding HSBC and basic bank accounts (BBA), they use to never allow someone to have a BBA and a 'normal' bank account. Only recently did they allow BBA customers to have savings accounts with a BBA.

The_pc_tech

@Snakey

Yep, I have tried and better tried to understand the various taxes so will definitely be engaging an accountant.

@10pence

Yes I've seen that on a number of accounts.

Apart from having a good history with them the other reason I'm leaning toward HSBC is they do say you can get access to business advice for trading with overseas customers and have always been an international bank rather than one that's grown into that via acquistion.

Anyway thanks all, advice received has been exceedingly valuable.

Think the way forward is for me to go and have a chat with them.