Straight answers on what an IVA means for your credit
Before agreeing to an IVA, you should know exactly how it will affect your credit file, both while it runs and after it ends. IndividualVoluntaryArrangements.net explains this clearly during your free IVA check, including how long the IVA would stay on your record, what the Insolvency Register is and what borrowing would look like while your IVA is active.
For many people, missed payments and defaults have already damaged their credit. We'll help you compare where you are now with where an IVA would leave you, so the decision is based on your real position.
What you'll find out
- How long the IVA would appear on your credit file
- What you can and can't borrow while it's active
- Practical steps to rebuild your credit once it ends
An IVA is recorded on your credit file for six years from the date it's approved, regardless of how long it lasts. You'll also appear on the public Insolvency Register until three months after your IVA ends.
Your credit file during an IVA
When your IVA is approved, it's recorded on your credit file with the credit reference agencies. The debts included are usually marked as defaulted or as part of an arrangement. This tells lenders you've had serious financial difficulties, so most mainstream lenders will decline new applications while it's active.
Many people find their credit rating was already affected by missed payments and defaults before their IVA started. In those cases, the IVA may not make as big a difference as they feared.
The Insolvency Register
The Insolvency Register is a free, searchable public record of people in formal insolvency in England and Wales, with a separate register for Northern Ireland. Your name, address and IVA details will be shown while your IVA is active and are removed three months after it ends.
In practice, the register isn't widely checked by the public, but it can be seen by anyone who searches for you.
Borrowing during an IVA
- You must not take on credit of more than £500 without your supervisor's permission.
- You'll usually need permission for things like car finance or a new mortgage.
- When applying for credit of £500 or more, you must tell the lender you're in an IVA.
Everyday things like a basic bank account, a mobile phone contract and utility accounts are usually still possible, although some providers may run credit checks.
Rebuilding your credit after an IVA
- Keep your completion certificate. Send a copy to the credit reference agencies if your file isn't updated.
- Check your credit file with each of the main agencies and ask them to correct any errors.
- Register on the electoral roll at your current address.
- Use credit carefully. A small credit-builder card that you pay off in full each month can help show responsible borrowing.
- Keep paying bills on time. A consistent payment history matters more than anything else.
After six years from your IVA's start date, the IVA itself drops off your credit file, along with the debts it included.
Compare the alternatives. Every formal debt solution, including bankruptcy and Debt Relief Orders, affects your credit file for six years. Even an informal Debt Management Plan usually leads to defaults that stay on your file for six years. See all debt solutions.
Will an IVA make my credit rating worse?
It depends on where you're starting from. If your credit file is still clean, an IVA will have a noticeable effect. If you've already missed payments, had defaults registered or had accounts passed to collection agencies, much of the damage has already been done, and an IVA may make less difference than you fear. It also has a clear end point, which open-ended missed payments don't.
When you contact us, we'll talk through what your credit file is likely to show now and how an IVA would change that, so you can make the decision with the full picture.
Everyday life during an IVA: banking, phones and renting
- Bank accounts: you can keep a bank account. If you owe money to the bank where your wages are paid, it may close your account, so a basic account with another bank is often sensible.
- Mobile phones: a SIM-only deal or pay-as-you-go is usually straightforward. Handset contracts involve credit checks and may be declined.
- Utilities: you can still get gas, electricity and broadband, although some providers may ask for a deposit.
- Renting: letting agents may run credit checks, so be open about the IVA and be ready to offer a guarantor if needed.
Getting a mortgage after an IVA
Getting a mortgage during an IVA is very difficult. After it ends, some specialist lenders may consider an application, usually with a larger deposit and a higher rate. Once the IVA drops off your credit file, six years after it started, mainstream lenders become an option again. Keeping your completion certificate and building a good payment history in the meantime both help.
Checking your credit file during and after your IVA
You can get your statutory credit report free of charge from each of the three main credit reference agencies: Experian, Equifax and TransUnion. Check them when your IVA starts, again during the arrangement and after it ends. Debts included in your IVA should be marked accordingly, and once you've completed the IVA, the record should show it as completed. If anything is wrong, you can ask the agency to correct it, and your completion certificate is useful evidence.
Talk to us before you decide
Worries about credit are one of the main reasons people hesitate to deal with their debts. If that's holding you back, send us an enquiry using the form at the top of the page. We'll explain the impact clearly, along with the alternatives, so you can decide what's right for you.