Credit After IVA - Everything that You Need to Know, Advice & More

An Individual Voluntary Agreement might have some long term consequences on your financial life, one of them is that you may find it really hard to avail credit after going through an IVA agreement.

Whether it is possible to get credit after an individual voluntary agreement or not, how to get credit after an IVA. I am here to answer all your questions and provide you with the relevant information about getting credit after an IVA.

Table of Contents

What Is an IVA?

Individual Voluntary agreement is a formally binding arrangement that holds complete legal value. The agreement is signed to avoid bankruptcy and clear the owing debts.

IVA works by involving a third party, which is known as an IVA firm. The company takes care of your finances and debt. It negotiates with the creditors and aims to pay off your debts by effectively managing them while charging a fee for their service.

If you want to know anything regarding the Individual Voluntary Agreement. Check out more on my website.

credit after iva

How Does it Affect Your Credit?

IVA is not simply a debt management plan, it is widely used and signed to avoid bankruptcy. This means that IVA in itself is selected when you are struggling to pay off money back to your creditors.

Hence, when you are in an IVA agreement, creditors are not willing to lend you any more money due to the fact that you are already struggling with debt. This situation also impacts your credit score and surely makes it harder to avail credit in the future.

Is It Possible to Get Credit After IVA?

The short answer to this question is Yes! It is possible for you to get different types of credit once your agreement is over, nonetheless, it won’t be easy.

There will be some obstacles in your way if you are opting out for credit again after the completion of your individual voluntary agreement and that is due to the fact that the agreement is mentioned in your credit file which is later passed on for credit reference while availing a loan.

Usually, the conventional banks and major lending institutions use the credit reference agencies to check up on the applicant’s credit rating and these credit reference agencies make a credit report for the analysis conducted out by the lending institutions.

Things Mentioned In a Credit Report

The credit report or a credit file of an applicant usually emphasizes the debt management and credit score. Things such as the term of the debt, the repayments, the discounts availed from the lenders and etc.

These factors are then combined to calculate the risk ratio of lending money to an applicant and the investment appraisal conducted by the bank to ensure they get a fair return on the money they are lending.

What Kind of Credit Can You Avail after an IVA?

IVA Credit Cards

There are some lending institutions that easily give out credit cards after some formal procedures. However, getting a credit card from these institutions is not a big problem compared to famous conventional banks.

Surely, there might be fewer options and facilities if you are getting a credit card from such a lending institution or programme but something is better than nothing.

To know more about IVA credit cards, please check this article.

Mortgage for IVA

You can apply for IVA mortgages after an IVA but it is really difficult to get one until the record has been cleared off from your credit file. Usually, the Individual voluntary agreement record gets off your credit file after six years.

The agreement still may affect the terms of the mortgage you will be getting, it really depends on the lenders at that point.

Personal Loans

You can apply for personal loans as you reach the end of your agreement. The loans you will be able to get after the completion might be short term, such as payday, budget, and loan extending from 4-8 months.

To get a long term loan you might have to wait for the si year mark when your credit file no longer mentions the Individual voluntary agreement history

IVA Car Finance

You can easily avail car finance after you are done with your agreement compared to other types of credits. You also might not have to wait six years to apply for car finance.

There are thousands of lending institutions with flexible car financing plans. You can always pick out and choose any one of them.

If you can’t find a good one, you might like choosemycar.com

Apart from that if you want to know all the details about car financing after the individual voluntary agreement, click here.

How Can You Get Credit after You have Completed Your IVA?

Lending Institutions

There are some banks that accept IVA customers. You can always refer to them to apply for their different kinds of lending plans.

There are different programmes for people who have been through an individual voluntary agreement.

If you want to learn more about the banks which accept customers with an individual voluntary agreement, here.

Credit Brokers

Credit brokers are also a good way to apply for loans and other short term lending options. The credit brokers themselves are not the lenders but they work on your behalf to find you an appropriate lender which matches your needs.

Credit brokers will charge a commission fee and this option might be expensive for many compared to direct lending or applying to lending institutions.

Direct Lenders

Direct lenders are people who are willing to directly lend money to you without involving any third party. There are usually two types of direct lending options, secured and unsecured lending.

Direct lenders are usually hard to find but if you do find one, this option might be a good way to rebuild your credit report file which includes your credit score.

FAQs

How Long Does It Take to Get Credit After IVA?

You can work towards applying for loans right after your agreement has ended and you have received the closure letter from the IVA firm. It will take some time to apply for credit and compile all the necessary documents.

Make sure you have all the relevant documents and listings while applying for a borrowing request.

How Long Does an IVA last?

The agreement will be listed in your credit file for 6 years. After the 6 year mark has completed the record for the individual voluntary agreement might get off your credit report but that will not give you a clean credit score.

Will taking Credit after IVA Negatively Affect my Credit Rating?

It depends! Credit in itself never deteriorates or appreciates your credit rating, however, the repayment of it on a timely basis surely does determine that.

After the completion of the agreement, it is a great chance for you to correct your credit file and make the best out of taking a loan by improving your credit rating.

But if you don’t properly manage your debt and do not repay it properly, it will definitely affect your credit rating.

What type of Credit is Best after an IVA?

I would recommend getting a short term credit after you complete your agreement. The reason is that by properly managing a small amount of debt, you will enable yourself to learn how to handle the big amounts.

By doing this you will also get a fair chance of improving your credit score.

Conclusion

IVA is a really great option for people to avoid bankruptcy and start their financial life again but it should be handled with utmost care because there are long-lasting repercussions of signing an IVA contract.

To avoid such repercussions you should always opt for an IVA company that is authorised and regulated by the financial conduct authority of the UK.

I hope this article provided you with all the relevant information regarding getting credit after IVA.

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