Repairing credit rating after IVA?

love2learn

Hi,

My girlfriend is about to enter into an IVA. I'm wondering if it's possible to repair a credit rating after this or will it show on her file for years after this? The reason being, after this IVA were looking to sell her flat and obtain a joint mortgage. How does this affect us please?

Chris

immoral_angeluk

Your credit rating will be battered for a good 6 years after an IVA has finished. So if she's paying it for 6 years then it won't be 6 years AFTER THAT that her record will be clear. It will effect her essentially the same as going bankrupt will. You should be able to get a joint mortgage but go to an independant broker and expect a high interest rate. If you have a better rating and are financially linked to her then you should get it in your name only as you'd be able to get better interest rates.

Dr_Hook

immoral_angeluk wrote: »

Your credit rating will be battered for a good 6 years after an IVA has finished. So if she's paying it for 6 years then it won't be 6 years AFTER THAT that her record will be clear. It will effect her essentially the same as going bankrupt will. You should be able to get a joint mortgage but go to an independant broker and expect a high interest rate. If you have a better rating and are financially linked to her then you should get it in your name only as you'd be able to get better interest rates.

Not quite right - both IVA and bankruptcy will 'drop off' a credit file 6 years after commencement. At that point (give or take a few months for the CRAs to update), the credit history will be essentially blank.

Easiest way to start rebuilding it would be to get a cheap contract mobile phone and/or a catalogue account - but don't pay the balance off in full every month. It might cost a little in interest, but it'll look better to potential lenders (there's no money to be made for them from someone who repays in full every month - though, granted, that's a bit different with mortgages)

Be aware as well that a lot of mortgage lenders will ask if applicants have ever been bankrupt or entered into a composition/compromise with creditors (IVA falls into the latter category). As IA says, you'll probably be looking at sub-prime lenders though.

immoral_angeluk

Dr_Hook wrote: »

Not quite right - both IVA and bankruptcy will 'drop off' a credit file 6 years after commencement. At that point (give or take a few months for the CRAs to update), the credit history will be essentially blank.

Oh in that case apologies.. I thought it was 6 years after the final payment.

misspoppy

More importantly has she gone through a debt charity so she isnt paying large fees for her IVA? IF she hasn't she should stop and contact one of the debt charities who will help her with an iva but for no fees.

Dr_Hook

immoral_angeluk wrote: »

Oh in that case apologies.. I thought it was 6 years after the final payment.

No worries I've wanted to know this before, eventually found this on experian's website:

What will happen to my credit report when my IVA ends?
Once your IVA ends, the Insolvency Service will let the credit reference
agencies know. The agencies will then update the IVA entry on your credit
report to show it has been ‘completed’. The entry then stays on your credit
report for six years from the date the IVA began. You might continue to
experience difficulties getting credit and other financial services because you were in an IVA in the past. If you do manage to find someone who will lend to you, it is likely that they will see you as a high-risk customer and they may charge you a higher interest rate as a result.

love2learn

Dr_Hook wrote: »

Not quite right - both IVA and bankruptcy will 'drop off' a credit file 6 years after commencement. At that point (give or take a few months for the CRAs to update), the credit history will be essentially blank.

I'm sorry to ask what looks like the obvious. But I want to be completely clear on this. So if my girlfriend started the IVA on the 01/08/2007 and it lasted till the 01/08/2010 does that mean it would have dropped of her credit rating on the 01/08/2013 or close to this at least?

And I'm not sure if you know, but with a Scottish Trust deed... would this be the same?

neverwinter

Sorry to butt into the thread, but thought I would ask a question related to this. I realise now that an IVA will drop off your credit rating 6 years after the IVA commenced, but is the same true of a DMP or is that a case where it drops off 6 years after your final payment?


Thanks for any help

Conor_3

Dr_Hook wrote: »

Not quite right - both IVA and bankruptcy will 'drop off' a credit file 6 years after commencement. At that point (give or take a few months for the CRAs to update), the credit history will be essentially blank.

Mine still shows my bankruptcy. I declared in March 2001 and was discharged in 2003.

I thought the same as you but apparently according to Equifax and Experian, it's right.

RAS

misspoppy wrote: »

More importantly has she gone through a debt charity so she isnt paying large fees for her IVA? IF she hasn't she should stop and contact one of the debt charities who will help her with an iva but for no fees.

Love2learn

Please can you respond to mispoppy. Who is your GF considering going to for an IVA?

Has she taken advice from CCCS, Payplan or CAB? If not she needs to do so before she signs anything

What are the fees? Does she appreciate that in the first two years all or most of what she pays may go the company organising the IVA?

Does she appreciate that if she defaults, then any of the debtors can make hher bankrupt?

Dr_Hook

love2learn: yes, if the IVA was accepted/approved in august 2007, it should be removed from her credit file soon (-ish, it can often take several months) after august 2013.

conor: I've had another look on experian's website and found this:

For how long will bankruptcy affect my creditworthiness?
In England and Wales, most bankrupts receive their discharge within one year, but the fact that you were bankrupt will stay on your credit report for at least six years. Although it will show when your bankruptcy is discharged, the discharge will not wipe your credit report clean. Your report may also separately show details of any debts that were included in your bankruptcy and these will stay on your credit report for six years, although you can add a note to your report to explain that all the debts were included in your bankruptcy. Even though the details of your bankruptcy will usually be removed from your credit report after six years (as long as your bankruptcy has been discharged and you have not been reckless – see next section) some mortgage lenders will ask if you have ever been bankrupt, so your bankruptcy could affect your creditworthiness forever. If your bankruptcy is never discharged, it can remain on your credit report indefinitely.

That reads to me like it should come off after 6 years? Might be worth double checking with experian/equifax - maybe it's on the to-do list to be updated?

Edit: love2learn - not sure about trust deeds, but I'd have thought the rules were the same.