How will an Individual Voluntary Arrangement (IVA) affect my credit rating?

If you miss or reduce the payments you make to your creditors even as part of an Individual Voluntary Arrangement (IVA), your credit rating will become worse.

If you start an IVA, you will pay less to your creditors each month than you originally agreed. It is therefore highly likely that they will view your account as being in default and issue you with a default notice.

You creditors will record that you have a missed payment and any default notices they issue on your credit file. The fact that you are in an IVA will also be recorded. This will cause your credit rating to become worse.

To find out more continue reading below...

How long will my credit rating be affected?

Your IVA and any default notices will remain recorded on your credit file for 6 years from the date it starts. During this time, your IVA and all late payment records and default notices will show up if anyone carries out a credit check against you. This is very likely to stop them from lending you more money.

After six years have passed, the record of your IVA and default notices will be taken off your credit file and your credit rating will start to improve again.

Wouldn’t my credit rating be affected anyway?

If you are struggling with debt and you are no longer able to pay your creditors, your credit rating will be affected whether you start an IVA or not.

As such, if you are in a position where you are unable to afford to pay your creditors and cannot help but miss your normal payments to them, worrying about your credit rating should not be the primary factor to consider when deciding whether to do an IVA or not.

Improving your credit rating

If you believe that your credit rating is already poor or you have been refused credit and do not know why, have a look at the BeatMyDebt.com 'Improve My Credit Rating' guide. This guide will help you understand why you have a problem and what you can do to improve your credit rating.You can also get a free credit report here.

To access the guide See the 'Related Links' box above.

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More Information: Expert articles

To read articles about Individual Voluntary Arrangements written by our experts please click on the expert articles and news link in the 'Related Links' box above.