BBS Loan affecting future credit rating?

Under_the_Radar_2

Sorry, I am sure this must have been covered somewhere but couldn't find on a quick search -

The time has come to start paying back my bbs loan, obviously we have the option of extending to 10 years / payment holidays etc. I could probably struggle and start paying back straight away, but if I were to take it easy and either extend to 10 years / take a 6 month payment holiday in the future would this affect my borrowing, I assumed it would but according to credit karma the loan doesn't even show up in my name and as it's technically a business loan will it have any bearing on future personal borrowing?

If there is no obvious penalty except a bit more interest on the loan itself, I'm very tempted to pay it comfortably over 10 years.

MattMattMattUK

Under_the_Radar_2 said:

Sorry, I am sure this must have been covered somewhere but couldn't find on a quick search -

The time has come to start paying back my bbs loan, obviously we have the option of extending to 10 years / payment holidays etc. I could probably struggle and start paying back straight away, but if I were to take it easy and either extend to 10 years / take a 6 month payment holiday in the future would this affect my borrowing, I assumed it would but according to credit karma the loan doesn't even show up in my name and as it's technically a business loan will it have any bearing on future personal borrowing?

If there is no obvious penalty except a bit more interest on the loan itself, I'm very tempted to pay it comfortably over 10 years.

Are you a sole trader or is the loan in the name of a Limited company?

If you are operating a limited company then it will have no direct impact on your future borrowing, although the state of your companies finances will reflect lenders appetite. If you are a sole trader then the BBL will have a direct impact on you personally as it is a debt and has to be repaid, which will be factored into any future lending decisions. 

Your credit rating itself is a meaningless number, no one sees it other than you and lenders use their own criteria rather than the random numbers generated by the CRAs.

Under_the_Radar_2

MattMattMattUK said:

Under_the_Radar_2 said:

Sorry, I am sure this must have been covered somewhere but couldn't find on a quick search -

The time has come to start paying back my bbs loan, obviously we have the option of extending to 10 years / payment holidays etc. I could probably struggle and start paying back straight away, but if I were to take it easy and either extend to 10 years / take a 6 month payment holiday in the future would this affect my borrowing, I assumed it would but according to credit karma the loan doesn't even show up in my name and as it's technically a business loan will it have any bearing on future personal borrowing?

If there is no obvious penalty except a bit more interest on the loan itself, I'm very tempted to pay it comfortably over 10 years.

Are you a sole trader or is the loan in the name of a Limited company?

If you are operating a limited company then it will have no direct impact on your future borrowing, although the state of your companies finances will reflect lenders appetite. If you are a sole trader then the BBL will have a direct impact on you personally as it is a debt and has to be repaid, which will be factored into any future lending decisions. 

Your credit rating itself is a meaningless number, no one sees it other than you and lenders use their own criteria rather than the random numbers generated by the CRAs.

Thanks for the reply, I am a sole trader and as such I had assumed what you are saying to be correct - as you say a credit rating itself is a meaningless number in most respects - however unlike every other loan, contract etc that has always appeared on these credit rating sites, there is no mention at all of the BBS loan, it doesn't look like the loan is attached to my name and as HSBC created a business account to manage it I wonder if, even though I am a sole trader, whether the loan is actually attached to me personally, especially as it is unsecured, and as such would affect future borrowing.

MattMattMattUK

Under_the_Radar_2 said:

MattMattMattUK said:

Under_the_Radar_2 said:

Sorry, I am sure this must have been covered somewhere but couldn't find on a quick search -

The time has come to start paying back my bbs loan, obviously we have the option of extending to 10 years / payment holidays etc. I could probably struggle and start paying back straight away, but if I were to take it easy and either extend to 10 years / take a 6 month payment holiday in the future would this affect my borrowing, I assumed it would but according to credit karma the loan doesn't even show up in my name and as it's technically a business loan will it have any bearing on future personal borrowing?

If there is no obvious penalty except a bit more interest on the loan itself, I'm very tempted to pay it comfortably over 10 years.

Are you a sole trader or is the loan in the name of a Limited company?

If you are operating a limited company then it will have no direct impact on your future borrowing, although the state of your companies finances will reflect lenders appetite. If you are a sole trader then the BBL will have a direct impact on you personally as it is a debt and has to be repaid, which will be factored into any future lending decisions. 

Your credit rating itself is a meaningless number, no one sees it other than you and lenders use their own criteria rather than the random numbers generated by the CRAs.

Thanks for the reply, I am a sole trader and as such I had assumed what you are saying to be correct - as you say a credit rating itself is a meaningless number in most respects - however unlike every other loan, contract etc that has always appeared on these credit rating sites, there is no mention at all of the BBS loan, it doesn't look like the loan is attached to my name and as HSBC created a business account to manage it I wonder if, even though I am a sole trader, whether the loan is actually attached to me personally, especially as it is unsecured, and as such would affect future borrowing.

I believe, and no one appears to be able to clarify either way, that a BBL will not show on an individual/sole traders credit report until the initial 12 month interest free period had passed. Also as part of any future borrowing you would be required to declare debts/repayments and it would be very unwise to omit a loan of any kind.

In reality you should take the repayment option which best fits your personal circumstances, paying back quicker will obviously reduce the interest you pay so is the best option if you can keep up with all your commitments, however if you think you will struggle then it is better to have lower repayments and not default as you can pay additional amounts off of the BBL should you have the spare cash in the future. 

Jeremy535897

You should receive a detailed letter from HSBC a couple of months before you are due to start repaying your BBL, explaining the options available under Pay as you Grow (extension to 10 years, 6 month payment holiday, 6 month interest only option). On PAYG, HSBC says "using these options won't affect your credit score, although it may influence how we assess your creditworthiness in the future." On extending the loan period, HSBC say:
"You should think carefully about your ability to repay over a longer timeframe, taking into account such things as if you intend to cease trading or retire within the revised term of your BBL."

All these options increase the overall amount you will pay in interest.

macman

If it's not a limited company loan, then who else do you think it is attached to, other than yourself?

Under_the_Radar_2

macman said:

If it's not a limited company loan, then who else do you think it is attached to, other than yourself?

Apologies if my wording wasn't precise enough. 
As the BBS loan does not appear to show on conventional credit checks, I was curious if it would be viewed in the same way as a "normal" personal loan by lenders. As has been answered above, no one seems to be able to confirm either way but it is possible and in all probability most likely that it will appear after the initial 12 month period. 

BBS loans are going to be quite significant amounts for most individuals that took them so how lenders treat them in regards to personal finance going forward is going to be quite important to clarify I would think. Obviously in an ideal world - pay off asap, but in an ideal world BBS loans wouldn't have been needed. 

sheramber

If you were struggling to pay back the BBL why would you want to borrow more money.?
How would you pay it back?
Presumably the loan will show in your business accounts and so reflect on the profitability of your business, which in turn would be considered for any further borrowing.

Under_the_Radar_2

sheramber said:

If you were struggling to pay back the BBL why would you want to borrow more money.?
How would you pay it back?
Presumably the loan will show in your business accounts and so reflect on the profitability of your business, which in turn would be considered for any further borrowing.

If the BBL shows on my credit report it could have a negative effect when things like fixed mortgage terms come to and end, and having a stronger credit report is better when it comes to renegotiating finance deals - as currently it does not show on a credit report I wanted to know how lenders were treating the loan. As I'm a sole trader I don't have "business accounts" as such, although HSBC have created a business account to handle the loan itself, possibly why it does not show in a credit report. 

It isn't necessarily about ability to pay it back, by the time the loan is paid I expect I will be looking to renegotiate various things either way. Obviously in an ideal world I won't have the BBL over my head (or for that matter any form of finance for personal or business things) - however without the BBL and effectively being stopped from trading for a year would have left me in a much worse position. 

In short I really just wanted to know if the BBL would show up on a credit report as I was surprised that currently it doesn't, and if the fact that is doesn't could be a positive thing. I apologise if that wasn't clear to those who have responded - I considered it a fairly sensible question. Is there such a thing as a silly question?

Percy1983

So far mine isn't showing on my credit file and if it does so be it as I don't want to borrow more.
In my case I have extended over 10 years on the simple basis its the cheapest debt I have so why pay it quicker.
It would appear from previous communications with my bank my business has a 'credit file' with them to which they make decisions based on how my account it run, they can see my business income/expenditure and I have had the account a long time (didn't just open to get BBL).

Thrugelmir

Under_the_Radar_2 said:

sheramber said:

If you were struggling to pay back the BBL why would you want to borrow more money.?
How would you pay it back?
Presumably the loan will show in your business accounts and so reflect on the profitability of your business, which in turn would be considered for any further borrowing.

If the BBL shows on my credit report it could have a negative effect when things like fixed mortgage terms come to and end, and having a stronger credit report is better when it comes to renegotiating finance deals - as currently it does not show on a credit report I wanted to know how lenders were treating the loan. As I'm a sole trader I don't have "business accounts" as such, although HSBC have created a business account to handle the loan itself, possibly why it does not show in a credit report. 

It isn't necessarily about ability to pay it back, by the time the loan is paid I expect I will be looking to renegotiate various things either way. Obviously in an ideal world I won't have the BBL over my head (or for that matter any form of finance for personal or business things) - however without the BBL and effectively being stopped from trading for a year would have left me in a much worse position. 

In short I really just wanted to know if the BBL would show up on a credit report as I was surprised that currently it doesn't, and if the fact that is doesn't could be a positive thing. I apologise if that wasn't clear to those who have responded - I considered it a fairly sensible question. Is there such a thing as a silly question?

When applying for credit you'll need to declare the liability.  Whether it's shown or not on every CRA is irrelevant. As it's a material fact and may have a bearing on the lenders decision. Debt is debt. That's an unavoidable fact.