Effect of liquidation on a director’s credit rating

Directors will often be concerned about the effect of a liquidation on their personal credit rating.  So, is it a problem?  Well, yes, but it’s not too bad.  Credit Reporting Agencies do keep track of companies that enter Liquidation and the names of the directors of those companies. When someone does a personal name search at a Credit Reporting Agency they do have the option of obtaining details of any companies that have entered liquidation while you were a director from the last seven years. 

But to get that information they have to specifically tick the box (and pay for it).  So that “mark” on your credit record is there.  But it is unlikely to be noticed if you are applying for credit in a personal capacity.  For example, if you are applying for  credit card or a personal loan from a Bank then it is unlikely to be noticed or become an issue.  If however, you are going for a business loan then it is much more likely to come to light.

So what can you do? Very little – it will be a mark of sorts on your credit record that will be found if someone looks deep enough.

Also remember that liquidation is not the same as bankruptcy. A company is a separate legal entity to a director and the company’s directors are not automatically liable for a company’s debts.  A personal bankruptcy is a serious black mark on your credit rating – being a director of a company that went into liquidation is a less serious mark.

Lastly, being a director of a company that enters Members Voluntary Liquidation (for solvent companies) will not affect your credit rating at all.