Making the decision to deal with your unsecured debts can be stressful and it is normal to worry about how it will affect your future, both financially and personally.
But whilst there is no way to stop an Individual Voluntary Arrangement (IVA) from appearing on your credit report and temporarily lowering your credit score, can you ever remove an IVA from your credit file completely?
In this guide, we’ll explore the link between IVAs and credit and whether you can remove an IVA from your credit report so you can know exactly what to expect from your arrangement.
Why choose Creditfix?
- Write off unsecured debts over £6,000
- Stop interest and charges soaring
- Reduced payments from £110 per month
Will an IVA damage my credit score?
Like most debt solutions, your IVA will be noted on your credit report and this will, unfortunately, lower your credit score.
Because of this, lenders may consider you a high-risk lender and, as a result, you may find it difficult to get approved for a loan, mortgage or further credit. You may also face higher interest rates which can increase your monthly payments when you take out further credit down the line.
However, once you have fulfilled the terms of your agreement, there are steps you can take to gradually rebuild your finances and improve your credit score. This includes:
- Pay your bills in full and on time
- Get a contract mobile phone
- Take out a pre-paid credit card
- Steer clear from large or unnecessary purchases
How long will an IVA stay on my credit report?
Like moth other formal and informal debt management solutions, an IVA will stay on your credit report for a total of six years from the date of approval regardless of whether it has been repaid or not. If you have completed your IVA within the usual five-year term, it will still be noted on your credit report but marked as ‘complete’.
When you apply for credit in the future, some lenders may also ask if you have ever entered into a debt solution and you will be obliged to inform them of your IVA. This will help them paint an accurate picture of your credit history and assess whether you would be a suitable candidate for the type of credit you are applying for.
It is also worth remembering that if your IVA includes a number of debts, they may be listed separately on your credit report despite being part of the same arrangement.
Who will know about my IVA?
If you are dealing with debt for the first time, it is normal to worry about the social stigma attached to it and how your friends, family and colleagues might react to the news.
However, the good news is that your friends, family or colleagues won’t be informed that you are in debt or that you are making creditor payments to a legally-binding agreement to repay what you owe.
The only people that will know about your IVA are the creditors that originally lent you the money, any bailiffs or debt collection agencies attempting to recover the debt, the Insolvency Practitioner managing the arrangement, the court that issued the IVA and future banks or lenders.
The details of your IVA will also be listed on a public database known as the Individual Insolvency Register but this information is only contained from the date your IVA was approved until three months after your completion date.
If you unsure about anything relating to debt advice, debt assistance, or the IVA process, your IP or an experienced personal insolvency team should be able to answer any questions you may have.
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Michael, Sunderland
Can I remove an IVA from my credit report?
In most cases, an IVA will be automatically marked as ‘complete’ when it has been repaid and removed from your credit report from the main credit reference agencies after six years have passed.
However, you must keep a close eye on your free credit file from all three credit reference agencies during and after your IVA has come to an end to ensure the information contained is accurate and up-to-date. If you notice any mistakes or time discrepancies (e.g. your IVA is still noted after six years), you must contact the relevant credit reference agencies with proof that you have completed your term and ask for it to be removed.
You may be required to send a copy of your IVA completion certificate or ask your Insolvency Practitioner to send a letter on your behalf.
It may also be possible to attach a note to your credit report with additional information explaining why you got into debt and required an IVA in the first place.
This can allow lenders to view your credit history at a glance and be better informed of the circumstances that led to your financial problems.
Can I finish my IVA early?
If you receive a windfall payment or lump sum during your arrangement, your first thought may be whether it can be used towards paying off your IVA earlier than the standard five-year term so you can become debt-free quicker.
In this case, it is possible to finish your IVA and become debt-free early but there are some things you should consider before going down this route.
For example, any unexpected windfalls or inheritance payments that you receive during your arrangement will be classed as assets and your Insolvency Practitioner must be informed as soon as possible.
If a friend or family member offers to pay off your IVA on your behalf, on the other hand, this is not considered an asset and can allow you to leave your arrangement early.
However, it is always worth remembering that regardless of whether you leave your IVA after five months or five years, it will still be noted on your credit record for a total of six years and you may still have to wait until your credit rating has improved before you can be approved for further credit.
Where can I get more advice on A guide on how to remove IVA from credit report and other debt solutions?
To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 0431 431 or click the button to get started
