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How an IVA will affect your credit rating

The effect of an IVA on your credit rating

An Individual Voluntary Arrangement (IVA) is a legal agreement between yourself and your lenders to pay back your debt in smaller sums over an extended period of time. You will require the services of an Insolvency Practitioner in order to set an IVA up.

An IVA can be a good measure to take to give yourself more time to pay your debt in an affordable manner, though it comes with a number of inherent risks that it is important you are aware of.

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

The following guide will outline to you the potential affects that an IVA could have on your credit rating, so you are fully aware of the consequences of setting one up.

Obtaining new credit

If you have set up an IVA, then this will negatively impact your chances of attaining new credit in the future. However, you might be given access to credit if it is for family related purposes or for living essentials and services.

If you are self employed or a company owner, you might be able to access credit to purchase business itinerary. However, due to a reference of your IVA being placed on your credit history, this finance might be given to you at a higher interest rate than usual. It is important to keep in mind that taking out further credit at a higher rate could escalate your financial difficulties and create new problems and fresh debt not managed by your IVA.

If you desire to obtain over £500 in credit whilst using an IVA, you will need to acquire written permission from your presiding insolvency practitioner, unless you require the finance to pay for your water, gas or electricity bills.

How will creditors know about the IVA

Information about your IVA will be placed onto a public register entitled the Individual Insolvency Register and will remain there for the duration of your agreement. This reference will impact your ability to access credit whilst on the IVA, and your creditors will likely look at the register before making a decision whether to grant you access to further finance.

Information about your usage of an IVA will also be present on your credit reference file, which is held by the three major credit reference agencies.

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

After your IVA comes to an end, the reference of it will be taken off the Individual Insolvency Register, usually three months upon completion. Other references of your IVA will be marked on your credit history for 6 years after the instigation of your IVA.

Is an IVA right for you?

If you believe that your financial difficulties are short term, or wish to resolve your financial difficulties quickly, then you might be better suited to utilising a different debt solution. Similarly, if you believe that you will require new finance in the near future, you may want to avoid an IVA as well.


However, if you possess a number of unsecured creditor debts which are spiralling out of control, then an IVA can be a way to give you the breathing you require to recover financially, spread your payments out over an extended period and address your debt in a structured, affordable manner. You may also choose to use an IVA if you have dependents and wish to uphold stability in your life through the retention of your valuable assets such as your home and car.