Does being a Director affect my credit rating?

Being a company director may only negatively impact your credit rating if you’ve liquidated one / multiple companies and it’s had a knock-on effect on your personal disposable income. Other than this, there shouldn’t be a negative effect on your credit file from being a Director, unless you’ve taken out multiple Director’s loans and have yet to repay them to the company. It may be that you need to take the advice of your mortgage broker before you begin your application process, and one of the things they’re likely to advise you is to check your credit file / score.

It’s easy to see and monitor your credit file. You can sign up for free at a number of reputable Online Credit Scoring websites – you don’t need to pay to view your credit file, so make sure you choose one of the well-known free websites that can be found in the UK. You’ll find that your file contains relevant notes from the past six years, including late and missed payments, credit applications, and a list of all payments made on time.

Your file may contain inaccuracies, and it’s important that you know how to challenge those. If you do find an error in your credit report, it is important to dispute it quickly: however, if you’ve only found the error years later, you can still dispute it and you absolutely should do so to assist clearing your report and improving your score.

  • Your first port of call should be the provider or creditor the error was associated with. So if your credit card company recorded that you missed a payment and you want to dispute that, call up the credit card company.
  • You should obviously have some evidence of the error being in fact an error, so any receipts or statements will be useful.
  • If the credit card company agrees that it was an error, they have to update their records within a one month period, and this update goes out to the credit reference agency.
  • However, if the credit card company says that they have no record of the error and everything is correct on their side, then speak to the credit reference agency.
  • They will review the error and make the relevant changes after an investigation into the dispute.
  • You should then also check your credit report with the other credit reference agencies to ensure that they too do not have the same error.
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Unfortunately, as the process above suggests, most of the leg work falls to you as the consumer. It can seem unfair if an error that is not your fault is recorded, especially if you then have to chase up the issue but it is worth investing your time in this process.

Being a company Director should give you an insight into how important it is to manage all aspects of your financial life properly, and managing your credit score / report is simply an extension of this. You’ll find that your credit report also gives you information on how to build / improve on your credit score, which can be useful if you’ve had damaged or bad credit in the past and are looking to rebuild your score prior to a mortgage application.

Ensuring that your credit score is at least average or good will help you get more and potentially better mortgage offers. As a Company Director, you’re going to be applying in the same format as a self-employed individual. You’ll need to have at least one year’s company and personal accounts (dependant on lenders, two year’s accounts may get you a better deal and you should always refer to your mortgage broker as your first port of call), plus your personal HMRC returns and sometimes a letter from your accountant. Of course, your personal and business bank statements and all proofs of ID will also have to be in place too. 

So rather than consider that being a Company Director could have a negative effect on your credit rating, you could actually consider it a positive in that you will have the key skills needed to make your credit score, paperwork, and application be as good as they possibly could be.

By | 2019-11-15T11:42:14+00:00 November 15th, 2019|