It can be tough living on a tight budget during an IVA, but your financial situation should be far better once you’ve completed it.
During an IVA, you’re usually not allowed to borrow money as part of the terms of your agreement.
Once you have completed your IVA, opinions differ. Some people are more wary about using credit ever again, where others are keen to make responsible use of credit once more. Your IVA, and any earlier defaults, will show on your credit history for at least six years from when it started, which means that once your IVA has completed it may be harder to find a lender willing to accept you until your credit history has improved.
If you’re still in an IVA
An IVA is a form of insolvency and is used when you can’t afford to repay the debts you already have – so it really doesn’t make sense to borrow more. In fact, to take on more credit when you’re still repaying your IVA, you’ll need express consent from your IVA supervisor first and this is only likely to be granted in exceptional circumstances.
However, once you have got to the end of your IVA, you’ll be given a certificate of completion by your supervisor. You should make several copies of this and forward one to each of the three main credit reference agencies – Experian, Equifax and CallCredit – and ask them to update your credit history. You’ll also want to get in touch with your creditors to confirm that you’ve completed your IVA and ask them to update your records.
If you’ve completed your IVA
The impact your IVA will have on your ability to be accepted for credit will partly depend on how long ago the start date was. If your IVA was not extended and lasted five years then it will take a further year for the IVA to drop off your credit history. If your IVA was extended and lasted six or more years then by the time it comes to an end the IVA itself should already be off your credit report.
Once your IVA has dropped off your credit history you can start to apply for credit again, if you want to. Your credit history will still be thin but there are lenders, such as Ocean, that specialise in finding loans, mortgages and credit cards for people who have struggled to manage credit in the past, or who have a thin credit history.
If you haven’t done so already, it’s a good idea to check your credit history prior to making any application – here you can see exactly what any lender will see. You can use the free services ClearScore and Noddle to do this.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.