Will an IVA affect my credit rating?

An IVA will affect your credit rating as it will stay on your credit file for six years after the date of commencement (typically one year after your IVA has been completed).

However, this needs to be put into context:

• If you’re in serious financial difficulty then the chances are that your credit rating is already impaired and will only continue to get worse as default notices are issued against you.
• All debt solutions (other than debt restructuring through remortgaging – if you have equity available in your home) will adversely impact your credit rating because you are reneging on your contractual repayments.
• If your financial situation is so severe that it requires you to enter an IVA, then obtaining additional credit will only make your situation worse.
• Your monthly IVA payments will take all of your monthly livings costs into account, which means you will not need to obtain any additional credit (other than in exceptional circumstances).

The important thing to remember is that the consequences of not dealing with your debt problem properly are much more severe than impairing your ability to take out further credit when you’re in severe financial difficulty.

You can read more about IVAs and whether they are suitable for your situation in our IVA section.

Debt Advice Foundation is a registered UK charity offering free, confidential support and advice on any aspect of debt, including IVAs. If you need to talk to someone about debt, please call the charity’s helpline on 0800 043 40 50 to speak to an adviser.