How Long Does an IVA Stay on my Credit File?
An individual voluntary arrangement (IVA) can be a helpful debt solution if you’re struggling to meet the demands of your creditors. It essentially creates a bridge between lenders and creditors by enabling both parties to agree on a suitable repayment plan.
In most cases, an IVA enables someone to decrease their monthly repayment obligations and extend the amount of time they have to pay back their debts. For example, if you owe £5000 and cannot meet the repayment demands, you could opt to pay back £100 a month for an extended time.
Once you enter into this debt management solution, all interest is frozen, meaning you can focus on paying back what you owe without the worry of interest increases.
It’s important to mention that an IVA is a legally binding agreement, so you should never enter into it lightly.
Our customers contact us for debt help, and many want to know more about IVA schemes. Some of the most prominent questions they ask are will I get credit in the future and will the IVA affect my credit rating.
How Long Does an Individual Voluntary Arrangement Affect Your Credit Score?
As any insolvency service will tell you, an IVA appears on your credit report because it shows that you need debt management advice and support. Working with an insolvency practitioner means you have an accessible way to pay off your debts, but it can also affect your credit rating.
Every IVA stays on your file for six years, which means you’ll find it challenging to get financing for a new car, business loan or mobile phone.
Most lenders will want to access your credit reference file so they can decide if you’re a viable candidate to receive a loan.
While some will view the report credit reference agencies offer as proof that you’re untrustworthy and won’t commit to the repayment plan, others will provide you with credit at higher interest rates.
Can I Get a Mortgage With an IVA on Record?
When you’re in the middle of an IVA, it can be difficult to get a mortgage, as it will impact your credit rating. However, some lenders favour candidates with a completed IVA because it shows they can stick to a repayment plan.
If you’re thinking about applying for a mortgage, you should wait for a few years after completing the IVA because it will increase your chances of acceptance.
Do I Have to Declare an IVA after 6 Years?
When you agree to an IVA arrangement, it will be evident on your credit file for six years. After that time (as long as you finish paying off the specified amount), you’ll have a clean file and can start again.
However, most lenders ask people to declare if they’ve ever had credit issues, so it’s always worth mentioning your past struggles. Even people with an excellent credit history can struggle to obtain a mortgage, and lenders look at affordability and employment to make a decision.
If you fail to make a declaration, the lender is less likely to agree to a mortgage, and it will impact your reputability and credibility.
Speak to IVA Advice
If you’d like to learn more about our range of debt solutions, please feel free to contact us today. We’re authorised and regulated by the Financial Conduct Authority and are happy to provide debt advice.
You can get in touch through our website or contact our registered office using the phone number. We look forward to hearing from you.