Does having a poor credit affect you starting a business or even your current business? This article explains everything you need to know about credit ratings and setting up a business.
You may also want to read our article on setting up a business bank account.
Can I set up a business with low credit ratings?
If you are able to repay your debts we see no reason why you wouldn’t be able to set up a small company. If your credit rating has been affected by your debt it may be harder for you but not impossible. However, there are certain professions, which are adversely affected by going insolvent, an accountant being one such profession.
However, there are a few areas that you may need to consider when dealing with your financial difficulty. Professional memberships and licensing will often have requirements of conduct, or fit and proper person tests. How personal finances are managed may affect the ability to keep a membership.
The type of business you are hoping to set up, future career aspirations, may also be affected by the choices you make now. For example, bankruptcy has many implications for some people and for others it has none. If you are setting up a Limited company then you will need to ensure you avoid bankruptcy.
It would be best to speak to a debt advisor and go through the details of your financial difficulties and see how best to deal with them. They will identify anything that you can do to resolve your debts and also warn of anything that you need to avoid.
Can I be a director of a company?
A poor credit rating could be due to previously missed payments on debts that have been fully repaid since and is no longer of interest to anybody. If you are bankrupt this may mean that you cannot take the position but it really is going to be a question that you would have to raise with the company itself. To put your mind at ease you can ask if your personal credit rating has any impact on your role or any impact on the business. They will be able to tell you if there are any implications and it should be clear from your employment terms and conditions.