Does an IVA Affect Your Credit Score

Learn how an IVA impacts your credit score, how long it stays on your credit report, and what steps you can take to recover your credit after an IVA

Does an IVA Affect Your Credit Score

An Individual Voluntary Arrangement, or IVA, is a formal debt solution available in the UK that allows you to repay a portion of your debts over a fixed period, usually five or six years. It can be a practical route for those struggling with unmanageable debts, but it comes with serious financial implications. One of the most important questions people ask before entering an IVA is: does an IVA affect your credit score?

The answer is yes. An IVA has a significant negative impact on your credit score and will be visible on your credit report for several years. In this article, we’ll explain how an IVA works, how it affects your credit score, what lenders see on your credit file, and how to rebuild your credit after an IVA is completed.

What Is an IVA

An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors, arranged through a licensed insolvency practitioner. Under an IVA, you agree to repay part of your debts through affordable monthly payments, and any remaining unsecured debts are typically written off at the end of the agreement.

IVAs are available in England, Wales and Northern Ireland. In Scotland, the equivalent is called a Protected Trust Deed.

How an IVA Affects Your Credit Score

1. It lowers your credit score significantly
Once your IVA is approved, it is recorded on your credit report and will result in a substantial drop in your credit score. This is because an IVA signals that you have been unable to meet your original debt obligations.

2. It is visible to lenders
Your IVA will be recorded on your credit file with all three major UK credit reference agencies: Experian, Equifax and TransUnion. Lenders can see:

  • The start date of your IVA

  • The status of the IVA

  • Any defaults or missed payments on individual accounts included in the IVA

3. It stays on your credit report for six years
An IVA remains on your credit file for six years from the date it is approved, even if you complete the arrangement early. This can make it difficult to get credit, a mortgage or even a mobile phone contract during that time.

4. It affects your ability to get new credit
While in an IVA, you are not allowed to borrow more than £500 without permission from your insolvency practitioner. After the IVA ends, lenders may still be cautious, even though your credit file shows that the arrangement is complete.

 

What Lenders See on Your Credit Report

When lenders run a credit check while your IVA is active or within six years of approval, they will see:

  • That you entered into an IVA

  • That you have defaulted on certain debts

  • That you may be subject to borrowing restrictions

  • A low credit score that reflects recent financial difficulty

Even after the IVA is completed, some lenders may ask if you’ve ever been subject to an IVA. If you answer yes, it may still affect their decision, even if the IVA no longer appears on your credit report.

Real-World Example

Adam entered into an IVA in 2018 after falling behind on credit card and loan payments. His credit score dropped sharply and remained low throughout the five-year agreement. After completing the IVA in 2023, the arrangement remained on his report for one more year until the six-year mark passed. Only then did his score begin to recover significantly.

Can You Improve Your Credit Score While in an IVA

Rebuilding your credit during and after an IVA takes time and patience. However, you can take steps to show responsible financial behaviour:

  • Always make IVA payments on time

  • Avoid missed or late payments on any other bills

  • Stay within budget and don’t take out unauthorised credit

  • Keep an eye on your credit report and correct any errors

  • Register on the electoral roll at your current address

  • Use a basic bank account with no overdraft to manage your money safely

After the IVA ends, you can begin to rebuild your score with credit builder tools, such as a low-limit credit card or rent-reporting services.

What Happens When the IVA Is Completed

When your IVA is successfully completed:

  • You’ll receive a Completion Certificate from your insolvency practitioner

  • Your IVA record will be marked as complete or satisfied on your credit report

  • After six years from the start date, it will be automatically removed from your credit file

  • Your credit score may begin to improve, assuming you have maintained positive financial behaviour

It’s important to check your credit file after the IVA is removed to ensure that all information is accurate and up to date.

Final Thought

An IVA has a serious and long-lasting impact on your credit score, staying on your credit report for six years from the date it begins. It will limit your access to credit during and shortly after the arrangement, and your score will remain low until the IVA is removed.

However, for many people dealing with overwhelming debt, an IVA offers a structured way to regain control. With consistent payments, good financial habits and time, you can rebuild your credit profile and move toward a stronger financial future.