How long do I have to wait after an IVA finishes before I can apply for a credit card?
Summary: This article reviews how an IVA can affect applying for credit, both while it is still running, and after its successful completion.
The terms laid out in an Individual Voluntary Arrangement (IVA) usually state that the individual cannot apply for extra credit while the IVA is still running. That said, it may be possible to apply for credit whilst still in an IVA, provided permission has been given by the IVA supervisor. However, it may be tricky to obtain any credit as the individual’s credit rating is likely to be very low due to the very nature of an IVA.
How does an IVA affect my credit rating?
As soon as an IVA has been agreed with the creditors, the IVA supervisor will notify the credit agencies and it is recorded on the individual’s credit record. It will remain there usually for a period of 6 years (12 months longer than the average IVA lasts for). By entering an IVA, the debtor will automatically default on any debt included in the IVA, and therefore their credit rating is likely to be poor, and as a result, lenders are less likely to give credit, or they may apply higher rates of interest. As the IVA remains on the credit record for 6 years, even after successful completion, it may still be difficult to obtain credit at preferential rates.
What happens after the IVA is removed from my credit record?
When an IVA is successfully completed, the IVA supervisor will send a Certificate of Completion to all of the creditors involved and the credit agency. After a further 12 months, the credit agency should remove any record of the IVA (if for any reason they don’t, then a letter should be written to request its removal). After this time, the credit record is effectively reset, meaning that there should be fewer restrictions on gaining credit. It is important for the individual to rebuild their credit rating if they want the best rates.