I've been using a personal current account for business for years. Now what do I do?f

eskbanker

Notnow wrote: »

I just can't imagine a bank going bust causing anyone trouble with all deposits of up to £80,000 or whatever it is covered by the government .I would have thought there was no need to spread money with those new rules.

At the risk of being pedantic, deposits are actually covered by the industry-funded FSCS rather than the government as such, but as mentioned by other posters, putting eggs into multiple baskets doesn't just mitigate banks going bust, it also helps if/when there are technical problems with banks, as many have experienced over the past few years, TSB being the most obvious high-profile example.

Spreading funds across multiple accounts also helps protect against other causes of unavailability, such as loss or theft of cards, or accounts being suspended or closed by heavy-handed trigger-happy banks who decide that your account conduct is suspicious to them for whatever reason....

ValiantSon

DCFC79 wrote: »

Is that the credit rating lenders dont even see ? Lenders see your history.

No a bank account being closed isnt bad for your credit history.
Id still get an account sorted for the business as soon as since the bank can decide to close the account when they like.

Not strictly true. Length of financial relationships is one of the factors considered when reviewing a credit file, so the closure of a long standing account could affect how an application for credit is viewed.

colsten

eskbanker wrote: »

Out of curiosity, I just had a quick look at my credit files and both MSE/Experian and ClearScore/Equifax show the four current accounts (including opening dates and payment histories) that I switched (from) in early 2016, all of which were LBG ones if that makes any difference. They are within separate 'closed account' tabs from the open account info though....

Interesting. I switched 3 Lloyds accounts to Natwest very recently recently, and none of these show in Clearscore. None of the accounts I switched in previous years are shown, either. The only closed accounts I can see are some British Gas ones

maxximus75

Not all accounts report to all CRA's.

colsten

Here's a blog about closed accounts on credit files

https://blog.equifax.com/credit/how-long-do-closed-accounts-stay-on-my-credit-report/

colsten

maxximus75 wrote: »

Not all accounts report to all CRA's.

That's a good point. My Clearscore even seems to miss one of my credit cards. I haven't used it in a very long time, so may be the provider doesn't bother reporting.

Anthorn

colsten wrote: »

This does not match with my experience. All my switched current accounts (of which I have many) vanished almost immediately from my credit files. Which CRA shows closed accounts for up to 10 years, which CRA preserves the history, and which lender(s) are checking for closed accounts?

I suggest that you go back to for example Clearscore and look for the closed / settled accounts section.

In that case where do accounts in the settled / closed section come from? This section can be seen in all three CRAs in Clearscore, MSE and Noddle. In my closed accounts section I have credit cards, bank accounts, loans and mobile phone accounts. Moreover, my closed British Gas account stayed on Experian as a settled account for 12 years.

Possibly the only reason why an account should not be moved to a closed account and is designated as a settled account is because it's a default or because there are delinquent entries in its history and has been settled possibly for an amount which is lower than the amount owed. Defaults and closed accounts themselves are removed on or around the 6th anniversary of the default date. But not so settled accounts.

Here's what Experian says:

Your credit report represents the history of your accounts. When you pay off or close an account, the lender updates the account to reflect the new payment status of the account. However, closing or paying off an account does not cause it to be removed immediately from your report.

https://www.experian.com/blogs/ask-experian/how-long-do-settled-accounts-remain-on-a-credit-report/

Defaults and closed accounts remain on the CRA file for 6 years after the default date and similarly settled accounts remain on the CRA file for 7 years in the case of Experian from the settlement date not from the account opening date.

Lastly and this is the punchline, whether an account is open, closed or settled is dependent on the status applied to it by lenders. However all the bank accounts in my closed/settled account section which have been kept in good standing for their duration are marked as "settled" and that is without exception.

Sorry for the long post but I have already cut it down as far as I can while maintaining some measure of accuracy.

Notnow

A final update for anyone that find this thread in the future and might find this information useful.

I opened a business account easily and everything is now sorted. After looking into this on the financial ombudsman site it says that a bank would never just close an account unless it was being used for fraud or you had threatened their staff.

It suggests that if you are caught using a personal account for business then in most cases the bank would simply write to you and ask you to open a business account.

I've got the first year of business banking free and after that I may well switch to another bank to get another free year or a better deal.

If like me you have been using a personal account for business then don't worry because nothing bad will happen and at worst you'll just have to open a new account.

eskbanker

Notnow wrote: »

After looking into this on the financial ombudsman site it says that a bank would never just close an account unless it was being used for fraud or you had threatened their staff.

It suggests that if you are caught using a personal account for business then in most cases the bank would simply write to you and ask you to open a business account.

Do you have a link for this, I couldn't find it on the FOS site? It would seem to exceed the FOS remit to speculate about how banks would act, and many threads on here tell of accounts being closed for other reasons....

Notnow wrote: »

If like me you have been using a personal account for business then don't worry because nothing bad will happen and at worst you'll just have to open a new account.

With all due respect, you can't extrapolate your happy ending into an assurance that it'll work out the same for everyone else! Apart from anything else, you posted that your bank hadn't picked up on your use of the account in that way, so on the face of it, you don't actually have any experience of what a bank will do if they (a) spot it and (b) decide to act on it....

BankCustomer

I have never been told by my bank that I cannot just use the one same account for both. It sounds like I need to look into it (and the bank is very aware that for over 20 years I have done so by the way for all kinds of reasons)