Can I get a credit card if I’ve had an IVA?

What is an IVA?

An IVA (Individual Voluntary Arrangement) is a legal agreement between you and the people you owe money to.

It lets you pay back all or some of your debt in a more manageable way – and is often used by people who are struggling to keep up with multiple debts. An insolvency practitioner will figure out what you can afford to pay, and the duration of your IVA.

You may find it difficult to access credit when you have an IVA because lenders are likely to see you as high risk.

How does an IVA work?

It can be hard to know what to expect at each stage of an IVA. Here's a brief overview:

• Setting up your IVA: You'll work with an insolvency practitioner, who'll look at what you owe and what you can afford to pay. They'll put together a proposal and send it to your creditors, who then vote on whether to accept it. If enough of them agree, your IVA is formally set up and your repayment plan begins.
• During your IVA: You can borrow up to £500 without permission, but it's generally not recommended. Anything above that needs written consent from your insolvency practitioner, and will only be approved in exceptional circumstances.
• When your IVA ends: You'll receive a certificate of completion. Send this to Equifax, Experian, and TransUnion to make sure your credit file is updated. Your IVA will still show on your file until six years from the start date, but it will be marked as complete — which looks better to lenders.
• After six years: Your IVA drops off your credit file entirely. You'll be free to apply for credit again, though your history may be thin from years of limited borrowing. This is the point to start rebuilding actively.

Can you apply for credit when you have an IVA?

It usually depends on how much you want to borrow.

• You may be able to borrow less than £500, as it doesn't have to be approved by your insolvency practitioner. However, you should consider whether this is the best option for you, as borrowing more money could lead you further into debt.
• It's important to remember that there is no guarantee you will be accepted for credit with an IVA, even for amounts less than £500.
• If you receive a lump sum during your IVA — for example, an inheritance, a work bonus, or a windfall — you'll usually need to report this to your insolvency practitioner, and some or all of it may need to go towards paying your debt.

What credit can't you take out?

If you want to borrow more than £500 during your IVA, you'll need express consent from your insolvency practitioner first.

Borrowing includes:

• credit cards
• personal loans
• overdrafts
• payday loans
• loans from family or friends

These types of borrowing are only likely to be accepted by the insolvency practitioner in exceptional circumstances, such as in a financial emergency.

Borrowing more than £500 without getting consent first would be a serious breach of your IVA and could lead to it being terminated.

Should you apply for a credit card while you have an IVA?

It’s usually best to wait for your IVA to clear from your credit report (six years from the date it started) before applying for credit.

If you make an application to borrow before your IVA has cleared from your report, lenders may be more reluctant to lend to you. This may reduce your chances of being accepted, or mean that you face higher interest rates.

It's worth knowing that you can also ask the credit reference agencies to add a 'notice of correction' to your file. This is a short note explaining the circumstances that led to your IVA, such as redundancy or illness. Lenders can see this note when they review your file, and it can help them understand your situation in context. You can request this directly through Equifax, Experian, or TransUnion.

Can you apply for a credit card after your IVA has ended?

After 6 years, your IVA will drop off your credit history, and your options for credit are likely to improve.

Your credit history may be thin after 6 years of limited credit use, but there are lenders who specialise in finding loans, mortgages and credit cards for people who have had issues with their credit.

One option worth considering is a credit builder card. This is designed for people with a limited or poor credit history, and tends to have more flexible eligibility criteria than standard cards. Used carefully — keeping spending low and paying it off in full each month — it can help you to start rebuilding your credit score over time.

Some lenders look at more than just your credit score when assessing applications. If you've come through an IVA and are working to get back on track, it's worth checking your eligibility before applying — a soft check won't affect your score and gives you a clearer picture of where you stand.

Remember, making multiple applications within 3-6 months can damage your credit history further. You can use an eligibility checker to see if you'd be accepted for a credit card without damaging your credit history before you apply.

Do you have to declare an IVA after six years?

Although your IVA will usually only stay on your credit report for six years, some lenders, particularly mortgage providers, may still ask you to declare past credit issues including an IVA.

It's important that you are always honest with lenders, because being dishonest could constitute fraud, and doesn't guarantee that you will be accepted anyway.

What to do if you can't pay your IVA

Speak to your insolvency practitioner. They will be able to advise you on which options are available and help make the best decision for your financial situation.

If you are unable to meet your living costs and the agreed monthly repayments for your IVA, or you need a bit of extra money for an essential purchase, your insolvency practitioner may be able to negotiate with your creditors.

This could be reducing the size of your monthly repayments or arranging a payment holiday for you.

It's important to note that if you take either of these options, your IVA will take longer to pay off.

If you're struggling with debt, you can access free financial advice and support from a professional debt specialist. Visit Money Wellness, StepChange, Citizens Advice, National Debtline, or MoneyHelper to find out more.