startups started this topic @ 08:07 on 30/08/2004
Hi- I have a bad credit history which means no bank will give me a business account- which is causing me problems.
Does any one know how to get round this? I was thinking of setting up a business account overseas to try and get round this? But they will probably still want to do a credit check using a UK credit reference agency such as Experian.
Anyone got a solution? Thanks.
RE: Buisness accounts if u have bad credit?
James Smith | 30/08/2004 10:31 AM
Well if you have bad credit you will struggle granted. If you have a pile of unpaid CCJ's against your name then you are probably wasting your time. Quite frankly if you are bad with money running a company is going to be an uphill struggle, so you do have to think “is this for me?”
However if your bad credit history was some time ago, everyone has been paid off etc and you are looking to improve things, I would suggest you approach the current holder of your personal bank account and ask for an account with no overdraft facility, and no cards. Most banks do a simple business account where you cant get into debt with them as cheques will be bounced and money wont come out of the wall if there is nothing in the account. You have to ask specifically for this, and expect to pay bank charges. After a while proving you can run things they may allow you to switch to a normal bank account.
Failing your local branch, try Lloyds as they certainly do one of these accounts, but you have to ask for it. Its no good filling in a standard application form as you will be rejected the second they look at your credit history. And every rejection makes your credit score worse.
An offshore account won’t help you, and will cause all manner of practical problems.
Also if you get the brush off from one branch of your bank, try another branch you sometimes get different answers…
Regards,
------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: RE: Buisness accounts if u have bad credit?
startups | 30/08/2004 11:54 AM
cheers for the advice. I will try asking for a bank with no cards or cheque book. That would be great if I can get it but I doubt I will.
Also why want an offshore account work for me? I just spoke to a comapny in Swtizerland that charges $300 to open an account for you and they do not do a credit check so they say.
RE: RE: Buisness accounts if u have bad credit?
rachael | 30/08/2004 03:03 PM
Is your history THAT bad that you would need to go to Switzerland??
You'd be better off following James advice and going explaining to the bank you've had bad credit and see if they can help.
If your still severly in debt and are not managing it well then maybe you should postpone your business or even run it part time whilst you work towards clearing any outstanding debt you have.
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RE: RE: Buisness accounts if u have bad credit?
aidcorcoran | 31/08/2004 08:50 AM
Hi
Natwest offer an account for adverse clients via the Direct Business Banking branch. The account comes with a cheque book and Solo debit / cashcard. There are no overdraft facilities. They offer a telephone banking service (but no online banking for adverse clients) and the branch network can be used for paying in cheques etc.
I would advise against paying anyone for information on adverse accounts - this is the account they will tell you to apply for. www.natwest.com has full details.
Hope this helps.
Aidan
RE: RE: Buisness accounts if u have bad credit?
rachael | 31/08/2004 11:07 AM
aidan, do you know why online banking wouldnt be offered? seems strange!
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RE: RE: Buisness accounts if u have bad credit?
aidcorcoran | 31/08/2004 11:50 AM
Rachael
I've no idea why they don't offer online banking - seems strange to me too!
I can't see what difference adverse credit would make to making this feature available. But an associate of mine who has the account tells me he was given the account without the online facility, and the reason given was his bad credit history.
Aidan
RE: RE: Buisness accounts if u have bad credit?
Paul B | 01/09/2004 09:12 AM
I am in Switzerland. Opening a bank account here is NOT and easy option. It is quite likely that no credit check is made, because it assumed your credit is good. As for example it is against the law to overdraw your bank account! $300 is a waste of your money, you will have no advantage over a UK account.
You must try and see your situation from the point of view of a lender - would you give yourself a loan?
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RE: RE: Buisness accounts if u have bad credit?
david_randall | 01/09/2004 10:38 AM
Hi All,
I have bad credit stemming back from when I was at uni. I got seriously ill, couldn't work and defaulted a couple credit agreements. One of which resulted in a CCJ.
I went through Natwest Direct Business Banking and found them to be extremely helpful. As Aiden points out, they don't offer any form of borrowing on the account for the 1st 12 months and only supply a Solo debit card so have to remain in credit at all times.
As someone relatively new in business, I find having to work on a credit only basis very useful and positive for my business.
Dave
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Randall Design: Accessible, affordable website solutions for the small business.
RE: RE: Buisness accounts if u have bad credit?
Steve-SFSgo | 01/09/2004 01:52 PM
Just going back to the overseas accounts - this could make banking very expensive in comparison to a UK account. If your clients are largely UK based then receiving GBP payments could result in high charges for you and your clients. It may also put some potential clients off if they realise your account is overseas.
Regards
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RE: RE: Buisness accounts if u have bad credit?
startups | 07/09/2004 01:37 AM
Thanks for all the advice. The info about Natwests direct business banking was especially useful. I went to see them today and was given a number to call. I hope they give me a business account but time will tell. Its interesting to hear that Dave has gone through the same thing as me, which gives me some hope.
Failing the Natwest Direct business banking account, I'll need to think about the overseas account again. I'm not sure why Paul B said that opening a business account in Switzerland would offer no advantage to a UK bank account? The advantage is that I would have a business account to use! My problem at the moment, when trying UK banks,
is that they wont even give me an account. Its not perfect, but atleast I will have an account to pay cheques into.
RE: RE: Buisness accounts if u have bad credit?
James Smith | 07/09/2004 09:05 AM
I don’t know what line of business you are in, so its hard to be specific but the main problems with running a Swiss account, apart from the credibility factor would be:
1. Cost of setting it up and running it
2. Cost of transferring money in/out (internationl cheque payments will presumably be expensive to deposit)
3. Delays in transferring money internationally in/out (no chance of 5 days for a UK cheque clearance and 3 days electronic, 2 weeks is more likely)
4. Clients will be unwilling to make direct payments to you due to fees and complexity of international money transfers
5. No access to UK standing order or DD system
6. You won’t have a UK cheque book which will cause problems
I could go on but its really not going to be a very commercial proposition unless you are using this account in a very limited manner. Its like trying to start a business with one hand tied behind you back.
Anyhow it looks like you are now going down the UK path which is where you really want to be.
Regards,
------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
---------------------------
Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: RE: Buisness accounts if u have bad credit?
startups | 27/09/2004 02:31 PM
Hi, I opened my account with natwest Im pleased to say!!! Thanks to the advice on this forum.
Out of interest is it just natwest who do these 'non-credit check' business accounts or do other banks have a similar sort of service?