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Unable to open a business bank account due to one default (paid off in full) 3 years ago.

Hi, I've recently gone freelance, and have found that most companies will only pay contractors via the contractors own Ltd co. So I set up a Ltd co. Spoke to HSBC to open a business bank account, I said I didn't need an overdraft or biz loan, but was offered a credit card. I told the adviser I had a default from the particularly nasty NatWest one month. This was 3 years ago when I was made redundant and ex aso stopped paying maintenance at same time. When I explained the situation to NatWest they promptly withdrew my overdraft. This has all been paid off in full, as I took money from my ISA to pay it off. I now have over £100k in my personal accounts, as I sold my house and I'm renting before finding next property. I have no debt whatsoever. I've now been refused a business bank account - effectively preventing me from working as a contractor. What can I do?


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If you were only in default for a short period purely because your overdraft facility was withdrawn and not through any fault of your own then write to the credit agencies providing proof and get them to remove the default. Mike

Hi Mike, I'm not sure I can prove I was made redundant - I suppose I could show a P45 from the time, and something from the court that shows I had to go to court to retrieve the unpaid maintenance. I've already asked NatWest to remove the default and they say they can't because it happened. They knew exactly what happened at the same as I wrote to them 3 times but they didn't bother to respond. I thought the credit agency can't remove a default, but you can only append a note. I guess I should have done this months ago but as I knew I don't need to borrow I thought it wouldn't be neccessary.

Get that information to the credit agencies. Also, you say that you were offered a Credit Card but didn't want one. Does that mean that you don't have one at all? If you don't, then get one, put a liitle on it each month and pay it off in full by Direct Debit by the due date. Your credit rating is a measure of how you handle debt, so unless you have some debt to handle your rating won't improve much. There would be no interest to pay if you pay off in full each month. A fiver a month is enough to create an improvement. Please bear in mind that the default will time-out after 6 years. Mike

Hi Mike, I have credit cards, from before the problem happened. One is Amex, who were much more understanding that NatWest, and with them I paid an agreed lower amount for some months, then when I got sorted, cleared the lot. That account has functioned without a hitch for the last 3 years and they recently increased my limit from £1500 to £2000 without me asking for it - I pay it off every month. I have another one I barely use, just for internet payments but pay off in full when I do use it. Another has a limit of about £1500 but I never use use it. I only said OK to the business credit card offer as I thought it would be a simpler way to separate personal and business spending. I really don't want to experience problems like those I went through when it happened, ever again. Frankly, I'd rather buy a big safe and have nothing to do with the banks - but you can't pay legitimate earnings into a big safe!

I would suggest that you formally close the credit card that you don't use because that limit counts against your available credit. Going back to your original problem, are you sure that you have to be a Ltd Co? The problem that some years ago, people were setting up as self-employed but not paying tax. HMRC then said that they must have a Self Employed Tax certificate in order for them to be employed. The firms employing them were supposed to check this certificate. Later on, some of those self employed became Ltd Cos which could be paid gross by the employing firm. As far as I am aware, the tax certificate route is still available. I suggest that you check it out. Mike

Hello OP, If you want to carry out business transactions without being fussy about which bank to open an account with then have a look at the following link: http://www.eacbs.com/guaranteedbankaccounts.php Shut the door of credit ratings and references. You will end up no where. Just concentrate on your business strategies/module. Suggestion: Establish an account with this and then after a year or so transfer the account to a bank of your choice, if you are not happy with their services. Regards Farrukh Jamil