I've been full-time for 14 months, but encountered a real downside today. It appears my credit rating has been affected by not paying tax.
How do other full-time traders overcome this issue?
Do you still provide accounts as per normal?
Credit Ratings
Hi peeps, until I'm good enough to make it as a full time trader, I'm stuck working in the financial industry - at the moment conveniently enough in the much maligned credit risk bit.
Sorry if this is a bit long, but if you're interested in the Credit Rating/Finance thing I hope it's of use...
As far as I'm aware, not paying tax won't in itself affect your credit rating - I don't think that the bureaux that hold and generate credit scores have access to information direct from the Revenue. In fact they're unlikely to be able to see exactly how much you're paying into the bank each month, so even that in itself won't make much difference. What they can see is stuff like your secured and unsecured exposure to loans, credit cards, overdrafts, and your history of paying off those and other bills (mobile phone, household stuff etc.).
Also they can see whether you're on the Electoral Register, your previous addresses, and how long you've lived there. All these things impact your credit score.
In terms of applying for credit etc., it isn't easy at the moment for anyone who isn't in full-time permanent employment. I'm not a mortgage specialist, but the type of self-certification mortgages that self-employed people used to get are undoubtedly harder to come by now. But I'd imagine they're still out there somewhere, just lots more expensive than they used to be!
In terms of applying for credit, I'd describe myself as a self-employed day trader (on the assumption that you're not claiming unemployment benefit, that is).
Personally, and assuming you haven't already, I'd set up a separate account in one of the smaller non-affiliated building societies, and use that to load and draw down on your betfair account. Then, on a regular monthly basis, I'd transfer a 'salary' from this account to your day-to-day bank. This is akin to what happens if you're legitimately self-employed with a separate business account. It will also help with your records of income.
Your best chance of getting a loan/mortgage may well be with your existing bankers, assuming you've kept up a good record with them, regardless of your trader status. However, I would strive to keep transactions with Betfair and other bookmakers out of your 'regular' bank account (or credit cards). They are flagged as 'gambling' transactions, and they will make banks and credit card companies nervous. Hence that separate account.
Finally, with regard to that credit rating - make the effort to check through what the bureau's are holding on you. There are only three - Experian, Equifax, and Call Credit. Ignore the bumf on their websites, and just apply for your statutory report, which will cost you £2.00 for each one. Read it thoroughly, and challenge anything that's wrong - you have the legal right to have anything incorrect corrected. It's surprising how often they get stuff wrong.
Generally speaking, you can improve your rating by paying your bills and loans on time, having 'in order' credit cards, being married, living at the same address for a few years, getting older, being on the electoral register, and having a permanent job. I'll leave it to you as to which ones you choose.
Le Tiss, I'd swap you financial advice for footy trading pointers any day of the week. I just blew £50 on Athletico v Pananthanikos!
Cheers all,
russxj6
P.S. If anyone out there is really at the point in their trading career when you need proper financial advice on how to set up, send me a PM and I'll have a chat with some of my old accountancy buddies to see what their thoughts are.
It's more than likely that there are others here who have been down this road already though, so please feel free to jump in.
Sorry if this is a bit long, but if you're interested in the Credit Rating/Finance thing I hope it's of use...
As far as I'm aware, not paying tax won't in itself affect your credit rating - I don't think that the bureaux that hold and generate credit scores have access to information direct from the Revenue. In fact they're unlikely to be able to see exactly how much you're paying into the bank each month, so even that in itself won't make much difference. What they can see is stuff like your secured and unsecured exposure to loans, credit cards, overdrafts, and your history of paying off those and other bills (mobile phone, household stuff etc.).
Also they can see whether you're on the Electoral Register, your previous addresses, and how long you've lived there. All these things impact your credit score.
In terms of applying for credit etc., it isn't easy at the moment for anyone who isn't in full-time permanent employment. I'm not a mortgage specialist, but the type of self-certification mortgages that self-employed people used to get are undoubtedly harder to come by now. But I'd imagine they're still out there somewhere, just lots more expensive than they used to be!
In terms of applying for credit, I'd describe myself as a self-employed day trader (on the assumption that you're not claiming unemployment benefit, that is).
Personally, and assuming you haven't already, I'd set up a separate account in one of the smaller non-affiliated building societies, and use that to load and draw down on your betfair account. Then, on a regular monthly basis, I'd transfer a 'salary' from this account to your day-to-day bank. This is akin to what happens if you're legitimately self-employed with a separate business account. It will also help with your records of income.
Your best chance of getting a loan/mortgage may well be with your existing bankers, assuming you've kept up a good record with them, regardless of your trader status. However, I would strive to keep transactions with Betfair and other bookmakers out of your 'regular' bank account (or credit cards). They are flagged as 'gambling' transactions, and they will make banks and credit card companies nervous. Hence that separate account.
Finally, with regard to that credit rating - make the effort to check through what the bureau's are holding on you. There are only three - Experian, Equifax, and Call Credit. Ignore the bumf on their websites, and just apply for your statutory report, which will cost you £2.00 for each one. Read it thoroughly, and challenge anything that's wrong - you have the legal right to have anything incorrect corrected. It's surprising how often they get stuff wrong.
Generally speaking, you can improve your rating by paying your bills and loans on time, having 'in order' credit cards, being married, living at the same address for a few years, getting older, being on the electoral register, and having a permanent job. I'll leave it to you as to which ones you choose.
Le Tiss, I'd swap you financial advice for footy trading pointers any day of the week. I just blew £50 on Athletico v Pananthanikos!
Cheers all,
russxj6
P.S. If anyone out there is really at the point in their trading career when you need proper financial advice on how to set up, send me a PM and I'll have a chat with some of my old accountancy buddies to see what their thoughts are.
It's more than likely that there are others here who have been down this road already though, so please feel free to jump in.
russxj6,
Thanks for such a brilliant reply
I recently seperated from my missus & wanted to rent somewhere for a while
However, despite my credit file being clear, and having a deposit & first months rent, they weren't keen on me because of my job
Not sure how professional traders can overcome this
Thanks for such a brilliant reply
I recently seperated from my missus & wanted to rent somewhere for a while
However, despite my credit file being clear, and having a deposit & first months rent, they weren't keen on me because of my job
Not sure how professional traders can overcome this
Yeah makes things pretty hard. I enquired about a house loan a couple of weeks ago just to see if there was ANYTHING that could be done to help me. The response I got was something like, thanks for your email, it was one of a kind, sorry but without an "income" we are unable to offer you anything.
As I suspected, I will just have to save up and pay cash. Started saving a couple of weeks ago, and I figure my best chance is to show a regular savings plan in an account that I don't ever withdraw from. With a new smaller bank, so maybe that will help with a better enquiry down the track, or maybe it will just give me a better chance to save the cash for it.
My new challenge, is moving house in about 3 weeks. Moving interstate, and as such, will need to actually go through a real estate agent. Haven't been on a lease legitimately for over 5 years and don't have a "job", so not sure how that will go. Tipping I will have to pay 6 months rent in advance just to get a look in.
Pain in the ass really. But at the end of the day, no job I have had in the past would put me in a position to require such a move, or be in the position to pay off a house. So I don't see myself as any worse off than I would have been anyway.
As I suspected, I will just have to save up and pay cash. Started saving a couple of weeks ago, and I figure my best chance is to show a regular savings plan in an account that I don't ever withdraw from. With a new smaller bank, so maybe that will help with a better enquiry down the track, or maybe it will just give me a better chance to save the cash for it.
My new challenge, is moving house in about 3 weeks. Moving interstate, and as such, will need to actually go through a real estate agent. Haven't been on a lease legitimately for over 5 years and don't have a "job", so not sure how that will go. Tipping I will have to pay 6 months rent in advance just to get a look in.
Pain in the ass really. But at the end of the day, no job I have had in the past would put me in a position to require such a move, or be in the position to pay off a house. So I don't see myself as any worse off than I would have been anyway.
Anyone looking to rent would probably be best offering a few months rent in advance if they can. I suppose the one good thing about not being able to get much credit is being in a position where you are forced to save rather than most people's predictament which is a lifetime of being indebted to banks in one form or another. I read somewhere that the average person paying a 30 year mortgage will end up paying 3 times the original purchase price due to the interest accrued. It may be a big 'if', but if you are young and can get good enough at trading to earn and save enough to buy somewhere outright in a few short years then over the rest of the course of your life you would save an absolute packet.
Hi all,
Pleasure to be able to offer some advice on something that I know a bit about - as opposed to trading
FWIW, when I was a self-employed IT Contractor (own limited company, 6 years worth of books, good credit history etc.) I still had to get a mate as a guarantor to co-sign the contract when I wanted to move into a rented property. Getting a self-cert mortgage was considerably easier a year or two later, but this was back in 2003.
So it's not just about being a trader, the self-employed thing seems to make estate/letting agents nervous. Without blowing my own trumpet, the guarantor was making a lot less than me at the time, but it's just the way things are, I guess.
The guarantor route might be a possibility if you're getting no joy any other way, perhaps.
Anyhow, sorry to hear some of you are struggling as the result of being good enough at this trading lark to go full-time, hope things get sorted for you soon. Would that I had your ability though
Cheers,
russxj6... doing slightly better on the footy lately - not quite to LeTiss standards yet!
Pleasure to be able to offer some advice on something that I know a bit about - as opposed to trading
FWIW, when I was a self-employed IT Contractor (own limited company, 6 years worth of books, good credit history etc.) I still had to get a mate as a guarantor to co-sign the contract when I wanted to move into a rented property. Getting a self-cert mortgage was considerably easier a year or two later, but this was back in 2003.
So it's not just about being a trader, the self-employed thing seems to make estate/letting agents nervous. Without blowing my own trumpet, the guarantor was making a lot less than me at the time, but it's just the way things are, I guess.
The guarantor route might be a possibility if you're getting no joy any other way, perhaps.
Anyhow, sorry to hear some of you are struggling as the result of being good enough at this trading lark to go full-time, hope things get sorted for you soon. Would that I had your ability though
Cheers,
russxj6... doing slightly better on the footy lately - not quite to LeTiss standards yet!