How an IVA damages your credit file
Once you enter into an IVA your credit file will be affected for a total of 6 years.
Creditors keep track of an individual's credit file and refer to it when assessing their current creditworthiness.
A credit file gives a clear indication to creditors of the credit history of an individual and whether they've experienced any recent financial problems.
They decide whether to extend credit based on this information so, if you have an IVA on your record, creditors will see you've experienced financial problems recently and will refuse to give you credit.
How Your Credit File Become Affected
The Government department dealing with all aspects of insolvency, including IVAs, is called 'The Insolvency Service'.
When your IVA has been accepted by creditors at the Creditors' Meeting your Insolvency Practitioner is obliged to notify the Insolvency Service. The Insolvency Service will add your name to the Insolvency Register where it will remain until its completion.
The Insolvency Register is a public record which logs details of all Bankruptcies, Individual Voluntary Arrangements and Debt Relief Orders in England, Wales and Northern Ireland.
As the register is a public record, it can be searched by anyone through the internet, however, the information is not indexed in the search engines, so individual cases and names do not appear in the search results.
The Credit Reference Agencies are informed of the IVA automatically and update their records straightaway.
This process ensures that your IVA appears on your credit file within a few weeks or months of the Creditors' Meeting, making it almost impossible for you to obtain credit with one of the major high street lenders, should you try.
Repairing your credit file
Under the terms of your IVA you are obliged to refrain from obtaining further credit whilst your IVA is active. However, once the IVA has been completed, there's nothing to stop you from trying to repair your credit file.
Most lenders will pay very close attention to the information on your credit file and, therefore, will not extend credit to you whilst the IVA is still visible on your file.
However, there are some lenders that specialise in offering credit to people with poor recent credit history.
One particular lender, Vanquis, will sometimes give credit to someone who's successfully completed their IVA, where it is yet to be removed from their credit file.
Your creditworthiness will strengthen as you demonstrate you can be trusted to repay the credit you've been given.
Using and repaying small amounts of credit each month will demonstrate to lenders you are worthy of being given access to credit and, soon enough, your credit file will repair.
After 6 years
Your IVA should be removed from your credit file automatically after 6 years, but there is no guarantee.
When your IVA completes your Insolvency Practitioner will send you a 'Certificate of completion'. You should then send a copy to each Credit Reference Agency to ensure they bring your file up to date.
Professional IVA Advice
The team behind My IVA Adviser are IVA specialists. We provide free, no obligation, personal consultations to anyone wanting to know whether an IVA is in their best interests.
If you would like to have a chat with one of our IVA specialists, please call 0800 088 7503 or, alternatively, complete this form and one of the team will call you back at your preferred time.