As you’ll no doubt already know, we recommend all of our clients change their bank accounts upon entering an IVA. That helps protect you from creditors who may try to freeze or take funds from your account, even though you’ve entered an arrangement to deal with your debts.
But what about once your IVA is finished? In this guide, we’ll explore whether you should consider setting up a new bank account after your IVA, the potential benefits of doing so, and which banks are best suited to people who have completed an Individual Voluntary Arrangement.
Why should I consider changing my bank account after an IVA?
First up, we want to be clear on something – there’s no obligation for you to change your bank account once you’ve successfully completed your IVA.
You already changed your bank account once, when you first set up the arrangement. This offered you extra protection from your creditors during the arrangement, and now that your IVA is coming to an end and your debts are about to be settled, your existing bank account shouldn’t be in any danger.
That being said, many of our clients like to make a completely fresh start once their IVA comes to an end. That process can involve setting up a new bank account, one that hasn’t been associated with making IVA payments over the previous five or six years.
Will I have trouble opening a new bank account after my IVA?
As someone who has recently left an IVA, your credit rating won’t be in the best position. As you know, even though an IVA is a tool to help you deal with your debt, it will have a negative impact on your credit score, at least temporarily.
Your credit rating will be impacted for the first six years after your IVA has concluded, and having a lower credit score will send a signal to potential lenders that offering money to you represents a risk.
These lenders may include certain high street banks, many of whom will reject people for new bank accounts if their credit rating fails to clear a certain threshold. That doesn’t mean you can’t open a new bank account after your IVA, but it does mean you have to choose your bank carefully.
Are there banks more suited to people who have been in an IVA?
At Creditfix, we’ve helped over 182,000 people turn their financial lives around using debt solutions like IVAs, so we understand the challenges our clients face even when their IVA is over.
We’re determined to help you improve your finances not just during your arrangement, but for the long-term. That’s why we created a network of partner companies who specialise in helping people like you adjust to life after an IVA and save money on essential costs.
Through our partner network, you can access a suite of financial products that will help you monitor your spending and rebuild your credit. These include banks who are happy to accept post-IVA customers. Two of the banks we work with are listed below.
Starling
You may already be a Starling customer, as they’re one of our recommended banks when we ask new clients to set up a new bank account when they first enter their IVA.
If you didn’t switch to Starling at the beginning of your arrangement, however, they’re a great option for anyone looking to set up a fresh bank account post-IVA.
Starling is an IVA-friendly bank, meaning they don’t perform credit checks on new customers, so you don’t have to worry about getting rejected based on your credit score. Also, there are no fees involved with opening a Starling bank account, so it won’t cost you a penny.
To set up a Starling bank account today, just click here and follow the simple steps.
thinkmoney
thinkmoney is another IVA-friendly bank that Yip has a partnership with. They also don’t require a credit check, so you’re guaranteed to be accepted for a new bank account as long as you’re over the age of 18 and live in the UK.
Unlike Starling, you will be expected to pay a £10 per month subscription fee to keep your thinkmoney account open, but you do get value for it.
thinkmoney doesn’t believe in unexpected charges, so you will never be charged a fee – even if you’re overdrawn or miss a payment. Also, they use smart budgeting to automatically set aside exactly how much money you need to pay your bills on time, so you’ll never miss a bill again. In addition, 75% of thinkmoney customers improve their credit rating once they join.
To find out more about thinkmoney, just click here.
How long will it take me to improve my credit after an IVA?
Improving your credit score is an ongoing process, whether you’ve been in an IVA or not. No matter how much you focus on it, it’s never really ‘complete’.
So while you should never stop striving to improve your credit rating, you will find that life after an IVA gets easier once six years have passed from when you completed your arrangement. That’s when you IVA will be wiped from your credit history, and your credit score will improve as a result.
Until then, you can make gradual improvements to your credit score by building up a positive payment history which demonstrates to lenders that you now have a record of repaying what you borrow. Our partner network can help you with that – to find out more visit the us here.