An IVA is recorded on your credit file for 6 years. However you can start to improve your credit rating as soon as the Arrangement is completed.
- When does the IVA come off your Credit File?
- Start using credit to repair your credit rating
- What type of credit should you use?
- Change Default Notice and CCJ dates
When does the IVA record come off your Credit File?
The record of your IVA will be removed from your credit file six years from the start date. You do not have to take any action. The removal is automatic.
The record cannot be taken off any sooner. Even if you complete your agreement early it will always remain on your credit file for 6 years from the start date.
Your credit rating will not begin to improve naturally until the record comes off your file. However there are various actions you can take prior to this which will help to speed up the repair process.
The length of an IVA can vary. If you are making monthly payments it will normally last for 5-6 years. However it could be settled sooner by paying a cash lump sum.
Start using Credit to improve your Credit Rating
After completing an IVA one of the issues you face is there are no records of responsible credit usage on your file. Potential lenders therefore have no positive information on which to base a lending decision.
Given this the best way for you to improve your credit rating is to start building up a new history of using credit responsibly. In other words borrowing on an unsecured basis and making the agreed repayments on time.
You may feel that being advised to start using credit again once you have finally finished your IVA is wrong. However this is actually one of the best ways to start to rebuild your credit rating.
What type of Credit should you use?
One form of credit that will become available to you after your IVA is completed is a so called credit repair credit card. These facilities are available to people who’s credit rating is still poor.
You will only be offered a small limit but this is not an issue. You should only use the card for convienience not borrowing. You must only spend what you can afford to pay back in full at the end of the month.
Paying the balance in full every month will avoid being charged any interest. It will also start to generate a history of responsible borrowing and repayment on your credit file. This will significantly improve your credit rating.
Take care not to use Payday Loans after completing an IVA. This form of borrowing will not help your credit rating. Rather it will help to raise addition concerns about your ability to afford credit in the future.
Change the date of any Defaults or CCJs on your Credit File
After your IVA is completed you should get a copy of your credit file. You can check this to see whether any of your creditors have issued Defaults or a CCJ (County Court Judgment) against you.
If so have a look at the date they were issued. If this was later than the start date of your Arrangement you should contact the creditor’s data controller and ask them to change it to no later than the start date.
This is important as Defaults and CCJs remain on your credit file for 6 years. If any were issued after your IVA started they will continue to negatively affect credit rating even after the record of the Arrangement has come off.
Creditors are obliged to ensure default notices and CCJs are issued no later than your IVA start date. If they refuse can complain to the Information Commissioner.