Big ticket purchases - Why I use a credit report first

I have been scouring the internet over the past few weeks looking for reasonable prices for a new car. As well as getting advice about how to haggle and negotiate for the bargain price, I thought I would also check out eBay to see what people were asking for nearly new cars in my price range as well, considering that we all know how a car depreciates the minute they are driven from the forecourt.

I was surprised to find that quite a lot of cars in my price range on eBay were being sold by motor dealers. Even more surprising was that these were smaller independent used car dealers within 5 miles of my house that I had never even heard of. I thought about whether, if I had come across these businesses whilst driving around, I would have been happy to part with £15k plus of my hard earned cash just because they offered a car that took my fancy. Even if I could then come home and check on the internet, maybe find them on eBay and check out their feedback - would this give me the confidence to enter into any sort of dialogue with them about purchasing a car?

I've worked in the credit and information industry for some time and the experience I've garnered would mean that I would probably be automatically undertaking quite a lot of investigation into any business I was thinking about paying for a product or service. This may not be the case if I had decided to shop at my local Ford or Vauxhall dealership but a smaller business that I have no previous knowledge of?
Rogue traders are always in the newspapers and on consumer tv programmes where individuals have lost significant amounts of money when purchasing from less than reputable businesses who subsequently run off with their money without doing a days work on one's new kitchen or deliver that new product as per the signed agreement. There is also the possibility that the company is close to going bust and the minute the money has changed hands, it all goes up in smoke. But it doesn't have to be that way.

Company credit reports can be large, complex documents but they are available to individuals as well as other businesses and they offer a lot of information that can help safeguard your money.

When buying your credit report, make sure you've got enough information to make an informed decision:

• Confirm the business’ identity – Look at their name, their registered office and trading addresses. Ensure that they are genuine and everything matches with what you already know of them
• Are they an established business? – If they are local, can you satisfy yourself that you can remember them trading in your area for some time or do any of your friends and neighbours have experience of them. How long have they been around for?
• Are they financially viable? – Reading profit and loss accounts and balance sheets may not be your forte but most credit reports will give quite a clear indication if the business looks a bit risky or is likely to go bust taking your money with it
• Look at their financial record – Even with the cleanest financial accounts, is there any other information that gives an indication of cash flow issues. County court judgments, insolvency notices, petitions to wind up the business etc are all signs that the business currently is struggling to pay its creditors
• Look at their personnel record – The directors of the company should be listed on a limited company credit report and proprietors or partners listed for other types of companies. Check who else these people are currently or previously associated with as poor track records can follow a person from business to business.


So, before you think about spending serious money in a business or personal situation, think about investing just a little bit on buying a credit report first. I know I will...

Banks returning to profit as small business lending suffers

HSBC Bank PLC - 00014259 reported a $11bn profit at the beginning of this week, closely followed by Northern Rock PLC - 06952311 also reporting a return to profit and Lloyds Banking Group PLC - SC095000 managing to hold on to £1.6bn for the first 6 months of 2010. RBS and Barclays Bank PLC - 01026167 are expected to report similar figures this week.

Even though these banks are illustrating that there is potential recovery in this industry since the beginning of the financial crisis, these positive figures are just a kick in the teeth for UK companies who are struggling to expand or even save their businesses and feel that these very institutions are failing to support them to that end.

The Chief Executive of the British Banking Association stated that between 85% to 90% of business loan requests are granted - which doesn't seem to ring true. What these figures don't tell you is that these loan requests are granted on the banks' terms - terms which are not particularly favourable to the person asking for the finance so they are rarely taken up. Reasons such as exceptionally high interest rates and the introduction of factoring and invoice discounting mean that many businesses refuse the offer because this isn't what they were envisaging in terms of finance. So, even if at the minimum 8 out of 10 requests are granted, the truth is that only 2 out of 10 are actually drawn down as loans. And this isn't just one bank - this is all of them, offering similar terms to each other making it harder and harder for a business to agree to something that they're unhappy with.

So, it is of no surprise that there are many belligerent business owners out there who aren't particularly impressed with the bank who are flaunting their large half-yearly profits.

BA flies into the red - What is the truth behind the headlines?

'There are lies, damn lies - and statistics'

A bit of an exaggeration perhaps but the reporting of financial figures is more about the headline result of a report than anything else. The result comes first and the explanation a very distant second in many cases - particularly from a British perspective. The following headline from last week is surely meant to shock and scream out from the pages, 'Hell! BA are going bust!!'

"BA suffers first quarter loss of £164 Million"

The glory headline is the result the reporter wants to tell, not the story behind it. Whilst the losses are severe and damaging, the result did include a number of "one offs", most notably the losses incurred when the airline along with many others was grounded for a significant period due to the volcanic ash cloud which could not be accounted for, but more significantly the ongoing industrial dispute with cabin staff over the attempt by British Airways PLC - 01777777 to bring them into line with other major airlines over working practices. Had it not been for these two items alone, B A would have made a profit, as this accounted for £250 million.

The full picture paints a different story in many, many cases but has less impact.... initially.

The moral of the story: assessing any business involves many factors and financial statistics and headlines should be used only in part to gain an overall assessment. It shouldn't be the defining factor.

GoldTrail gone bust

GoldTrail Travel Limited - 03090844 ceased trading on Friday 16th July 2010 joining the list of 9 other british tour companies that have failed this year.
International Flights Limited - 04183165 (ceased trading 2nd July 2010)
Malachite Travel Limited - 06240051 (ceased trading 2nd July 2010)
Birdseekers (ceased trading 28th May 2010)
Wigmore Holidays and Travel Limited - 02912210 (ceased trading 10th May 2010)
Finlay's Ski-ing Limited - SC095316 (ceased trading 27th April 2010)
Adventura Limited - 03314315 (ceased trading 15th April 2010)
Love Holidays Limited - 06705128 (ceased trading 24th March 2010)
The Flight Bureau UK Limited - SC169353 (ceased trading 24th March 2010)
Scantours Limited - 00916330 (ceased trading 2nd March 2010)
Business Travel services Limited - 01792321 (ceased trading 28th January 2010)

In addition, GoldTrail's sister company Quickstep Leisure Limited - 03545230 also ceased trading on 20th July 2010.

The business, which has reportedly left some 16,000 holidaymakers stranded this weekend has ended the fairytale for another 30,000 individuals who hoped to travel to Turkey this summer for a cheap trip.

The words 'If it looks too good to be true, it probably is' will be ringing in the ears of a good proportion of those would-be sunseekers as other retailers in the tourist industry wonder why GoldTrail was allowed to continue trading over a year longer than anyone expected.

In March 2009, the BBC's consumer programme 'Watchdog' featured the complaints of a many a GoldTrail customer who would not be repeating the experienc due to low quality accomodation, lack of hygience in the serving and presentation of goof and general loack of service from the tour representatives.

Considering that similar holiday packages were offered with alternative operators at 5 times the price that GoldTrail had asked, it is of no surprise that GoldTrail were discounting too heavily - trying to encourage more clients to buy, with no hope of making enough money to pay the various hoteliers and air carriers. The Litera and Med Hotel chains based in the Eastern Mediterranean part of the word provided the accomodation for GoldTrail customers. Many of the holidaymakers that were in these hotels when the administration announcement was made on Friday were asked to pay further monies to continue their stays as the hotel had not been paid by the GoldTrail business.

The rumour mills have been doing the rounds and suggest that although GoldTrail had been cutting financial and service corners for some time, other factors brought the demise sooner rather than later. On 23rd June 2010, KTHY a Turkish Cypriot airline carrier suspended all operations. This company were one of GoldTrail's main airline carriers and by all accounts, GoldTrail had their work cut out re-scheduling flights for their customers on alternative flights. In addition, the other carriers that were approached to take passengers (Atlas Air and Flypig) demanded that they were paid upfront for the service.

An education in what the Civil Aviation Authority have been called on to give prospective holidaymakers. Tour operators and Travel Agents are pleading with the regulator to ensure that the GoldTrail pactive is not repeated - not even when the demand because of the economic downturn appears to be exactly what is required.

So, although GoldTrail were trying to be the Fairy Godmother, in affording overseas holidays to thos ehow considered it was out of their reach, they are in fact the Wicked Witch, leaving manay a stranded, out-of-pocket, disheartened traveller in their wake.