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
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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.
An individual voluntary arrangement (IVA) registered on your credit file can have quite a negative impact on your chances of securing any new finance agreements whilst it remains in place.
So, once you enter into 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 make sure to regularly monitor the progress of your IVA 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.
- Make sure you honour the terms of your IVA agreement in full and repay all of the outstanding debt. Once you reach this point the status of your IVA on your credit file will be marked ‘complete’
- If for any reason you believe the status of the IVA on your credit file is inaccurate 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 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 from that point. 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 the status of 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.
You should bear in mind, however, that these amounts will need to be declared to your insolvency practitioner straight away as they would be classed as assets for the purposes of repaying your IVA debt regardless of whether that’s your wish or not.
Money gifted by a family member or friend for the purpose of paying 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, this 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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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 beforehand, 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 upon your credit score when your IVA is finally removed from your credit file.
Yes, in some cases a credit application will ask you to declare if you’ve ever entered into an IVA, regardless of when that was. In these instances you should answer honestly in order 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.
There are, however, specialist bad credit mortgage lenders who specifically cater for borrowers with IVA and they often have bespoke deals available.
See our guide to getting a mortgage with an IVA for more information.