If I told you that having a good credit rating is good for you and your business, you wouldn’t be surprised. Nevertheless, many people are still surprised when I tell them how easy it is for your credit rating to be damaged. For example, if you have a judgment entered against you, that is left unpaid for more than a month, it will remain on your record for 6 years, even if you pay it off after that date and even if you didn’t know about the judgment being entered or the proceedings being issued. Ignorance of the law is no excuse!
But the surprises don’t end there.
We all know how important your credit rating is for things like raising funding or attracting new clients. Who is going to want to do business with you if you are known for not paying your bills and who is going to lend you money if you don’t honour your obligations?
But what about legal proceedings. Could a poor credit rating have an adverse effect on you if you ended up being sued, or wanting to bring proceedings. Well, yes, and for more reasons than you might realise.
Firstly, and possibly obviously, it’s about your credibility. If a dispute is going to include your word against the word of someone else, your honesty and trustworthiness is going to be important. Issues like whether you tell people you will pay, and then don’t (i.e. you lie) can be just as relevant as whether you have a criminal conviction.
However, possibly less obviously, if your company has an international element to it, you can be prevented from transferring funds abroad if someone with a claim against you believes you are doing so to avoid paying them. Whilst a court will look closely at all the details before granting such a draconian order, they will take your conduct into account. So if you are known for not paying your debts (even if you have a good reason) then there are risks beyond the obvious ones.
All the more reason to be careful in your financial dealings and take legal advice wherever possible.
Kleyman & Co Solicitors. The full service law firm. Obvious and obscure advice.