Removing An IVA From Your Credit Reports
After 6 years, your individual voluntary arrangement will be removed from your credit report. If it remains you can contact the appropriate credit reference agency. This page contains affiliate links. Find A Mortgage Online Ltd may receive a commission for qualifying purposes.
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Your credit history and score is a really important part of any finance application you make. Even if you think your score is perfect, your advisor is going to want to see and understand your report and make sure they’re supporting you in the right way.
Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
An individual voluntary arrangement (IVA) registered on your credit file can negatively impact your chances of securing new finance agreements while they remain in place.
So, once you enter an IVA, it’s important to understand how long it will remain on your credit file and what steps you can take to remove it. You should also regularly monitor your IVA’s progress by consistently checking your credit reports.
How to remove an IVA
Removing an IVA from your credit file will allow your finances and daily life to get back on track. Essentially, there are two ways you can do this.
- Ensure you honour your IVA agreement’s terms in full and repay all the outstanding debt. Once you reach this point, the status of your IVA on your credit file will be marked ‘complete.’
- If you believe the status of the IVA on your credit file is inaccurate for any reason, you can contact the appropriate credit reference agency and ask them to either update their records or remove it completely.
To do this, you would need to provide a copy of your IVA completion certificate as evidence to back up your claim or request a letter from your insolvency practitioner to confirm that the debt has now been repaid.
How long does an IVA stay on your credit file?
Once approved and in place, an IVA will typically remain on your credit records for six years. Repaying the debt before this timescale will only alter the status of the IVA on your credit report—it will not remove it altogether.
Once it’s been repaid, your IVA will show as ‘complete’, indicating that you have met all the terms laid down in your agreement.
Can you pay off an IVA early?
Yes, you can. If, for example, you receive an unexpected cash windfall or inheritance, you can use that to pay off your outstanding debt.
However, you should bear in mind that these amounts will need to be declared to your insolvency practitioner immediately as they would be classed as assets for repaying your IVA debt, regardless of whether that’s your wish or not.
Money gifted by a family member or friend to pay off the IVA debt would not need to be declared and can still be used for this purpose.
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Once you enter into an IVA and it is registered on your credit record, it will inevitably reduce your credit score, as this is based on the information registered on your file. The best way to keep track of exactly how much impact the IVA has had is to regularly monitor your credit records.
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FAQs
It’s impossible to say exactly how the removal of an IVA will affect your credit score, as everyone’s financial situation is different. But there’s no doubt your chances of securing finance are much stronger without it showing on your records.
There are steps you can take to improve your credit score, such as ensuring you’re registered on the electoral roll and keeping up to date with all of your other regular financial commitments.
This will all help positively impact your credit score when your IVA is finally removed from your credit file.
Yes, a credit application will sometimes ask you to declare if you’ve ever entered an IVA, regardless of when that was. In these instances, you should answer honestly to avoid any potential repercussions at a later date.
If you have an IVA, getting new lines of credit isn’t completely out of the question, but this would typically be only for quite low amounts (up to a maximum of £500 and pre-approved by your insolvency practitioner) charged at a higher interest rate.
Having an IVA against your name can make it more difficult to secure a mortgage, as some lenders might decline you outright. It can also mean you could end up with a higher interest rate since the lenders that will consider you might increase your rate to offset the risk.
However, specialist bad credit mortgage lenders exist who specifically cater to borrowers with IVAs and often offer bespoke deals.
