What Happens to my Credit Rating in an IVA?
If you enter into an an IVA, this is registered on your credit file. Normally, an IVA will last for a maximum of 5 years. After the IVA is completed, your debts are then called “Satisfied”. You will receive a certificate of satisfaction from your insolvency Practitioner. The record of your IVA will continue to remain on your credit file for 1 additional year (a total of 6 years from the first day of the IVA). This means that if your IVA runs for only 4 years, the record on your credit file will remain for a further 2 years.
While your IVA is running, you must not take any credit without the prior knowledge and agreement of your insolvency practitioner. It is most unlikely that your IP will agree to you taking credit unless this is for the benefit of your creditors (for example re-mortgaging your house to release a lump sum for your creditors). If your IP does agree that you can take credit, you should be aware that your credit rating will have been effected by your IVA and so you will probably have to get specialist lending advice.
After your IVA is completed, the record of your IVA will remain on your credit file for 6 years from the date your IVA was accepted. This means that it is possible that you will continue to be refused credit until this time has passed. In order to minimise the problems, once your IVA is finished, you should send a copy of your certificate of satisfaction to both of the credit agencies (Experian and Equifax). They will then mark against the IVA record that it has been satisfied. It will then be down to the individual lender to decide whether they want to lend to you or not. Generally, you will be able to take a mortgage with little problem. However, you might have to get advice from a specialist broker and you might not bet the best interest rates on the high street although competitive rates are generally available.Your credit file will only truly be back to normal after 6 years when the record is taken off the file completely. This will happen automatically.
This may all sound like doom and gloom. However, remember, although you will be living on a tight budget while you are in an IVA, after it has completed you will be able to keep 100% of your disposable income. Instead of buying the things you want on credit, you will be used to living without your disposable income and so you could then start saving to buy the things you want for cash!
This entry was posted on Tuesday, January 23rd, 2007 at 5:50 pm and is filed under IVA Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
January 31st, 2007 at 9:36 pm
I have ready many posts where is seems are large number of people are concerned regarding their credit rating. I think after going through an IVA or BR lessons are learnt to stay away from obtaining credit, i could not care less if my credit rating never recovers i will never in a month of sundays want to go down that route again as it is so easy to get caught in the web of Debt.
February 21st, 2007 at 9:13 pm
I am in total agreement with Coco. If you enter into an IVA, one of the last things on your mind should be borrowing more money on credit cards and personal loans after it is completed.
The only time I would be thinking about taking credit having been through an IVA is if you want to take out a mortgage to buy a property. In this case, you are not likely to be able to get the best mortgage deal straight away. However, there is nothing to stop you taking a slightly more adverse mortgage initially and then changing to a better rate after say 2 years