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Firstly, it’s good to know that most of the time, during a company liquidation, it won’t hurt your own credit score. Your company and your personal finances are usually two separate things. Your credit score, which helps lenders decide if they should lend you money, stays mostly untouched by what happens to your company.
There are exceptions to the norm, which could result in the company liquidation having an effect on you personally. Here are some situations where liquidating down your company could actually hurt your personal credit score.
If your business fails due to director misconduct, you might be held responsible for its debts. This is known as wrongful trading. It is unusual for these scenarios to occur however, it’s important to know it could happen. If you are worried about your conduct, our team will very quickly be able to identify for you whether there is a risk.
If you’ve agreed to personally cover a company loan or supplier payment agreement with your own assets and the company can’t pay it back, you’ll have to. If you can’t, you’ll be personally liable for that money, which could hurt your credit score.
While an old company liquidation itself doesn’t hurt your credit score. If you try to borrow money or agree credit terms for another company later, it may be flagged that a company you were involved with has been liquidated. This is a caution sign for lenders but usually isn’t a big problem unless it’s happened numerous times.
It’s still possible to get a mortgage even if you’ve had a company which has been closed. It might be harder though. Lenders look at things like your credit score, your income, and other debts when deciding to give you a mortgage.
If you run a business on your own, or with a partner, and it’s not a limited company, then your personal and business finances are considered one in the same. If your sole trade business has debts, these could have a negative affect towards your personal credit score.
There are other areas which could put you personally at risk when a company is in trouble. These include:
Your credit score is based on how you manage your money. To keep it healthy, make sure you pay back what you owe on time and don’t borrow more than you can afford.
Most of the time, your personal credit score is safe and sound when a company you’re involved with closes down. But there are situations where it could be affected. If you’re unsure whether your situation will flag up any issues, give our team a call and we can very quickly identify if there are any areas of potential concern.
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