Reply to: What do you tell financial companies your status is?

[contractor79]

First of all, make sure that if you pay things off in full that it comes up in your credit report. My bank credit card payments in full going back 12 years did not appear on credit file as bank did not submit those records to credit agencies.

I don't invest company money in anything but 'high' interest bonds from bank. I'm talking about investing personal money. I try and minimise cash holdings as return is so poor and diversify the rest in assets that can generate higher returns, albeit more volatile.

[richy]

TykeMerc does pay "many on time" payments... the balance in full, every month by the sound of it... Which will be better for his credit history than making the minimum payment every month.

Depends what financial company is evaluating. What criteria ar they working too?

Do they want someone who makes min payment, and lets them charge interest on the rest?

Are they cautious, and want someone who pays the whole lot off every month?

Cheers, richy

[richy]

TykeMerc - ok so you have 24 months living expenses sitting in cash. That's comforting. Two problems with this:-

1. Inflation. You think you have 24 months living expenses but it may well turn out to be only sufficient for 16-20 months because of unforseen plus the fact it's in cash and inflation eats into its value plus the cost of things incrase over the 24 months. Ouch. What if you're on the bench for 20 months? You default after 20 months? Not good. No need for this situation to occur which leads me onto the next point

2. The time to prepare your finances and credit profile is ideally in your good time, before you hit the bench i.e. now. By not doing this you are missing out on investment gains and building up good credit profile to secure better and longer 0% credit deals.

Hi contractor79

Does your ltd co invest in metals? Or you personally?

my ltd co has likewise many months cash reserves, retained profits.. I would like to make it work better than A+L's 1% interest, and SecureTrust's 3%!

How are you doing your investments? Are you taking out company bond issues? Is your ltd co buying the metals shares?

Cheers, richy

[markmm]

We use American Express Gold card that is always fully paid each month through DD, which keeps money in our current account mortgage.

[Mr.Whippy]

And it's common sense to use credit cards for financial protection and reward schemes... our DVD collection is basically paid for by the Play.com vouchers we get from the CC.

Indeed... I just got my Mrs a nice TAG Heuer watch for free for Xmas....thanks to the rewards from using a credit card to pay for everything, business and personal

Should hopefully get me a few brownie points

[d000hg]

To be honest, if you are working as a contractor then getting credit isn't normally something that you would be doing.

I think most contractors still have a mortgage. And it's common sense to use credit cards for financial protection and reward schemes... our DVD collection is basically paid for by the Play.com vouchers we get from the CC.

Not sure why the OP is asking specifically about being out of contract. What about when in one? I am a software developer. I am a company director. I am (sort of) self-employed, running own company.

[jmo21]

We carry about £0-4000 in debt year round on 0% purchase for X month credit cards, but the money that goes on them is every day stuff that we would be spending anyway.

Keeps money in our account, off-setting our mortgage, pay the min each month, and off in full when the deal ends, then start again with the next 0% purchase deal.

Works great for us, and I always make sure I have money in the bank to cover it, and we live within our means, otherwise I wouldn't do it - you do need to disciplined and sensible (and boring?! )

[Mr.Whippy]

In my case I keep my commitments small, maintain several fair limit credit cards by paying them off every month

not really true, you will have no credit history to speak of so will be viewed as higher risk than someone who has made many on time credit payments, so you won't get the best offer even if you have 100k in your bank account

TykeMerc does pay "many on time" payments... the balance in full, every month by the sound of it... Which will be better for his credit history than making the minimum payment every month.

[VectraMan]

I think I put "Company Director" in for my car insurance. Which is true, I am.

Last time I was at the bank I noticed on the screen they still had me down as working for my old permie employer (from 5 years ago), and my old permie salary.

I thought it best not to say anything.

[javadude]

I've never had unplanned time off as I'm a Christian and God has provided contracts when I need them but when I take planned time off I squirrel enough away in advance to continue paying salary, pension etc. While not working I consider myself to have the same job title and employment status. When it comes to financial applications, like the recent re-mortgage I took out, I put down Computer Programmer or something similar for a "job title" type question. For "employment status" type question I usually put down "self-employed" unless they have a "director" option requiring further information. For the mortgage they wanted copies of the last 3 years accounts for proof of income so along side that I gave them a figure of salary + average dividends.

[contractor79]

TykeMerc - ok so you have 24 months living expenses sitting in cash. That's comforting. Two problems with this:-

1. Inflation. You think you have 24 months living expenses but it may well turn out to be only sufficient for 16-20 months because of unforseen plus the fact it's in cash and inflation eats into its value plus the cost of things incrase over the 24 months. Ouch. What if you're on the bench for 20 months? You default after 20 months? Not good. No need for this situation to occur which leads me onto the next point

2. The time to prepare your finances and credit profile is ideally in your good time, before you hit the bench i.e. now. By not doing this you are missing out on investment gains and building up good credit profile to secure better and longer 0% credit deals.

[contractor79]

Based on you past posts about financial difficulties and the original post where you implied defaulting or reaching an arrangement to delay mortgage payments I think I'll ignore your advice thanks.

no that's not what I'm saying at all

I've a better than fair idea of what my credit profile looks like and I suspect after what you've said in this thread and on previous ones I'd prefer to have mine than yours.

Cheap credit won't last forever and I'm much more comfortable having modest commitments and a cash stockpile than a massive debt overhead.

I have very positive net assets and (much more importantly) very good liquidity. Your cash stockpile may give you mental comfort but it loses value each year it's a bad place to put your hard earned earnings. I say load up cheap credit when the going's good when everyone wants to lend to you, build up a great credit profile, so you can borrow more and more on better credit terms, whilst simulatenously invest in n metals and equities in the background. The metals and equities generate good returns well in excess of your cheap credit and inflation. This year my equities and metals have earned 20-30% whilst I pay back only about 3% on my borrowings. Taking your approach, which I used to do, would mean I have a large cash stockpile earning 3%, which is more than wiped out by inflation so you lose value whilst I gain 15-20%. Worst that can happen is that you run out of cash to pay your credit min repayment? No problem, sell some equities and metals.

[TykeMerc]

Based on you past posts about financial difficulties and the original post where you implied defaulting or reaching an arrangement to delay mortgage payments I think I'll ignore your advice thanks.

I've a better than fair idea of what my credit profile looks like and I suspect after what you've said in this thread and on previous ones I'd prefer to have mine than yours.

Cheap credit won't last forever and I'm much more comfortable having modest commitments and a cash stockpile than a massive debt overhead.

[contractor79]

No I don't put unemployed as I'm not, I draw a salary.

I don't believe in living off credit, one of the benefits of contracting rates is the ability to minimise commitments so that in the event of a protracted bench period commitments are small, plus of course should I need credit in an emergency then my commitment profile isn't alarming to a potential lender.

not really true, you will have no credit history to speak of so will be viewed as higher risk than someone who has made many on time credit payments, so you won't get the best offer even if you have 100k in your bank account

I'm not a big fan of churning credit cards as the banks are wise to it and I don't see a reason to chuck them 3%, plus if they decide to do away with the 0% deals then I won't be stuck for an alternative.

no sign of them getting rid of 0% deals, they're always there

In my case I keep my commitments small, maintain several fair limit credit cards by paying them off every month and have an offset mortgage with a positive balance so I have liquid funds available. Conservative yes, but I'm quite risk averse when it comes to financial commitments these days.

I used to be like that. Not anymore. Capital is valuable why waste that on your immediate living needs when on the bench - just put it on cards, do min repayment, shift balances around to minimise interest you're paying, in the meantime let your gold and equities grow in the background... much better liquidity...

Remember also, and this is a VERY IMPORTANT thing to realise folks:- the time to borrow is when you don't need to borrow. When you NEED to borrow, no one will want to lend to you. It's a paradox of life and trust me my advice on this one is good.

[TykeMerc]

No I don't put unemployed as I'm not, I draw a salary.

I don't believe in living off credit, one of the benefits of contracting rates is the ability to minimise commitments so that in the event of a protracted bench period commitments are small, plus of course should I need credit in an emergency then my commitment profile isn't alarming to a potential lender.

I'm not a big fan of churning credit cards as the banks are wise to it and I don't see a reason to chuck them 3%, plus if they decide to do away with the 0% deals then I won't be stuck for an alternative.

In my case I keep my commitments small, maintain several fair limit credit cards by paying them off every month and have an offset mortgage with a positive balance so I have liquid funds available. Conservative yes, but I'm quite risk averse when it comes to financial commitments these days.