How many years after an IVA can I get credit?

How many years after an IVA can I get credit?

Summary: This article discusses the affect of an IVA on obtaining future credit, both for the duration of the IVA itself, and after its successful completion.

One of the conditions of entering into an Individual Voluntary Arrangement (IVA) is that the debtor should not apply for any more credit throughout its duration (usually 5 years). This is quite logical, as the whole point of an IVA is to help the individual become debt free. However, there may be certain circumstances whereby additional credit may be required. If this is the case, then the IVA Supervisor must be consulted and permission granted. That said, as an IVA is entered into the credit record, it could make applying for further credit difficult.

How does an IVA affect credit ratings?

As soon as an individual enters an IVA, details are recorded on their credit file and will remain there usually for a period of 6 years. This means that even after the IVA is complete (usually 5 years), details will still be on file for a further 12 months. When the IVA has been completed, the IVA supervisor will issue a certificate of completion and this will be passed on to the credit agencies.


Applying for credit during an IVA

Throughout the duration of the IVA, applying for credit must be with the express permission of the IVA supervisor. If permission has not been granted, it could result in the failure of the IVA altogether. It is also compulsory to inform any potential lender of the IVA. This in itself could result in credit being refused as lenders may not look favourably on someone who clearly has a history of debt problems. That said, being in an IVA itself shows lenders that the individual is rectifying the situation and has a budgeting plan in place. Should credit be given, however, it is likely it will be at a much higher interest rate.


Applying for credit when an IVA has been completed

Assuming that the application is within the first year of the IVA completion date, it will still be recorded on the credit file, and the applicant must advise any potential lenders of this fact. However, assuming the IVA was completed successfully, creditors may look favourably on the fact that the individual has implemented a budgeting plan and beaten their previous debt. It is likely that the individual will not be given the best rates as someone with a clean credit history as the lender will see them as a higher risk. After the IVA has been removed from the credit file, then there should be no reason for the IVA to impact on future credit, though the individual may have to rebuild their credit rating to secure the best deals.

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