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Credit rating - impact of an individual voluntary arrangement

An Individual Voluntary Arrangement (IVA) is a formal and legally-binding agreement between you and your creditors to pay back your debts over a period of time. An IVA must be set up by an insolvency practitioner.

An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider.

This page tells you about how an IVA may impact your credit rating and access to future credit.

Getting credit

If you have an IVA you may find it difficult getting credit in the short term. You may be able to get credit for personal household goods and services.

If you own your own business you may be able to get credit for business goods and services. However, you may be charged higher interest rates. This could cause you to get into more debt that you can’t afford to pay.

If you want get more than £500 of credit you must get written permission from your insolvency practitioner, unless the credit is for public utilities such as water, gas or electricity.

How will creditors know about the IVA?

Details of IVAs are kept in a public register called the Individual Insolvency Register. Details of your IVA will stay on the register for the length of the IVA. They will be removed three months after the IVA has ended. When you apply for credit, the creditor may check this register.

Details of the IVA will also be kept on your credit reference file by credit reference agencies. Creditors will check your credit rating on your credit reference file before agreeing to lend to you.

Will an IVA affect your credit rating in the long term?

Once the IVA is completed, your details will be removed from the Individual Insolvency Register after three months. Details of the IVA will be held on your credit file for six years from the date that the IVA starts.

Is an IVA right for you?

If you are going to need more credit in the short term, an IVA might not be the right debt solution for you. A Debt Management Plan might be more appropriate.

However, if you are struggling to pay your current debts, you should try and avoid borrowing more money.

Next steps

Other useful information

The register of IVAs can be searched free of charge on the Department of Enterprise, Trade and Investment website at www.insolvencyservice.detini.gov.uk.

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