An IVA and Your Credit Rating

What information appears on your credit file?

If you choose an informal Debt Management Plan, it may not appear on your credit file at all, though creditors might add a note. Because you’ll be paying less than your original agreements, those accounts could be marked as in default — and a default stays on your file for six years.

For an IVA, bankruptcy and other forms of personal insolvency, the start date is always recorded on your file, and another record is added when it ends. Both are removed six years after the start date, unless there are unusual circumstances such as a Bankruptcy Restrictions Order.

What happens during the six-year period?

While the information is on your file you’ll find it harder and more expensive to get credit, and during an IVA you’ll be restricted from new borrowing as part of its terms. Your IVA is also listed on the public Individual Insolvency Register while it’s active. See adding new debts to an IVA for why taking on borrowing during an IVA is risky.

What happens after the six-year period?

Once the information drops off your file, getting credit usually becomes easier and cheaper. Some lenders still ask whether you’ve ever been insolvent, so be honest. If you remortgage, it’s worth speaking to a broker who specialises in helping people with a history of credit problems.

When can I start to repair my credit rating?

You can begin once any restrictions on borrowing have lifted. Start small — a credit card designed for rebuilding credit, used for small purchases and paid off in full each month, gradually builds positive history. MoneyHelper explains how to check what lenders see.

Wondering how an IVA compares on credit impact? Read IVA vs Debt Management Plan, or is an IVA better than bankruptcy.

Free, independent debt advice is also available from MoneyHelper, StepChange, National Debtline and Citizens Advice.