Guarantor and credit report

gazfocus

I naively signed as a guarantor for a small business loan last year that my ltd company took out to keep our heads above water, and due to the economy as it is, the company is struggling to maintain the loan. I have spoken to the lender today and have offered to pay the loan off in full once the sale of my house completes, but they won't hold off defaulting the account unless either a) the arrears are paid in full TODAY or b) our conveyancing solicitor provides an undertaking that the loan will be paid upon completion of our sale. 

Our solicitor has refused to provide an undertaking as the loan has no relation to the house that my wife and I own personally, and I don't have nearly £7k in the bank to hand over to the lender today.

So, my query is, if the lender terminates the loan and places a default marker against the ltd company, as a guarantor, will that put a default marker on my personal credit file as well? 

sourcrates

Is the loan currently being reported to your personal credit file ?

If yes, then the default will show, if no, then it won`t.

gazfocus

sourcrates said:

Is the loan currently being reported to your personal credit file ?

If yes, then the default will show, if no, then it won`t.

No it isn't. The reason for asking what I'd seen conflicting information, some of which mentioned that as a guarantor, if the original borrower defaults and the guarantor can't meet the demands of the lender, the guarantor gets a default too.

sourcrates

For that to happen the loan would have to be reported to your credit file.

A default on an account, is a separate thing from a default on a credit file, if you default on a loan by non payment, you are in default on that account, and if that loan is also reported to your credit file, as it normally is, than a default can be registered there too.

However, if that account is not reported to your credit file, there is no where for that default to be shown, so you can be in default, but have nothing showing on your credit report.

gazfocus

sourcrates said:

For that to happen the loan would have to be reported to your credit file.

A default on an account, is a separate thing from a default on a credit file, if you default on a loan by non payment, you are in default on that account, and if that loan is also reported to your credit file, as it normally is, than a default can be registered there too.

However, if that account is not reported to your credit file, there is no where for that default to be shown, so you can be in default, but have nothing showing on your credit report.

Ok, so how likely is it for the lender to report the loan to my credit report just for the purpose of putting a default marker on?

sourcrates

Unlikely, its a business debt for starters, its not currently shown on your personal credit file, and I expect that will not change.