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Will I Be Able to Take Out Credit With an IVA?

When someone takes out an individual voluntary arrangement, they must adhere to a strict set of rules and regulations. But it’s important to understand that an IVA is a last resort for many people, and you should only use this debt solution if you can’t meet your monthly payment demands from creditors. Knowing the terms of your IVA can save you a lot of time and headaches, so if you’re wondering how an IVA will impact your credit score, we’re here to share everything you need to know.

Can I Get Credit With an IVA?

An individual voluntary arrangement enables you to pay off your debts over a more extended amount of time, with your creditors agreeing to pause their interest rates. It’s beneficial for both parties because you get some breathing space, and your creditors will receive the money you owe. Your finances directly impact how much you pay on the IVA; it can affect your credit rating and stay on your credit file. Many of our clients find they take out an IVA but aren’t sure of the restrictions it involves. As an authorised and regulated company, we know everything about the limitations an individual voluntary agreement has, so here are the answers to the most common questions we get from clients.

Can I Get a Credit Card With an IVA?

Every IVA comes with strict rules about what you can and can’t do. One such rule is that you can’t get a credit card unless you have written permission from an insolvency practitioner (IP). In some cases, you might be able to borrow up to £500, but it’s not always the case. You should always check the terms of your agreement before you apply for any of these financial arrangements:

Personal Loans
Payday Loans
Credit Cards
Overdrafts
Borrowing Money From Friends or Family

Most lenders will be unwilling to provide a loan or credit card if you’re on the insolvency register because it shows you defaulted on your debts. However, you might be able to reach an agreement with a provider in some cases, but these often come with higher interest rates.

How Long After An IVA Can You Get Credit?

Most people live off some form of credit, and most lenders understand that it’s an essential part of everyday life. When you take out an individual voluntary arrangement (IVA), it will go on your credit file, which means that when creditors check your credit report, they’ll see you struggled with your finances. After six years pass, the IVA will be removed from your credit file, but you’ll have to rebuild your credit rating again. This can be difficult, and credit reference agencies might be unwilling to provide you with a card or loan, but you can take steps to rebuild your file and become an attractive candidate for financial support.

Can I Repair My Credit Score After an Individual Voluntary Arrangement (IVA)

In most cases, you’ll be able to take small steps to build a better credit score. After receiving your IVA certificate of completion, you can apply for credit cards with higher interest rates. As long as you pay off your purchases in full each month, you can slowly increase your reliability. While some people may find it challenging to build a new credit score, we always recommend you do everything you can because it’s likely that you’ll need a mortgage or loan later on in life – so it’s always a good idea.

Check Your Credit File

We always recommend that our clients check their credit files after an IVA to understand how much you need to rebuild. Experian is one of the leading free credit referencing agencies online, and anyone can use the service to monitor how their credit changes over time. An IVA stays on your file for six years when it starts, so if it takes you five and a half years to pay off, it will only be on a credit report for a further six months. So while an IVA could affect your credit score and chances to receive financing in the short term, it can clear you of long-term debt and ensure you’ll be able to write outstanding payments off.

In Summary

Here are some vital things you should know about taking out an IVA:

You need permission from your insolvency practitioner if you borrow more than £500.
An IVA will stay on your credit file for six years.
You may be able to get credit, but your IVA will affect the credit cards and loans you can access.
If you borrow money from friends or family, you’ll still have to get permission from your provider.
Our financial advisors can help you access an IVA and find the right solution for your circumstances.

Speak to Us Today

Suppose you’re worried that it may be challenging to get back on track after an IVA, or you’ll be limited to credit solutions in the future. Our specialist financial advisors are experts in debt management solutions and work with clients who struggle to finance or repay their debts. We’re registered in England and regulated by the Financial Conduct Authority, so if you’d like to discuss taking out an individual voluntary arrangement, we’ll be willing to offer support and advice. Whether it’s discussing your potential IVA payments or other debt solutions, we’re always on hand to improve your future. Get in touch with us today.