You will want to repair your Credit Rating after your IVA is finished. Given time this will happen naturally. However there are certain things you can do to speed up the process.
- What is your credit rating like after an IVA?
- How to start the Credit Repair process
- Using a Credit Repair Credit Card
- Getting a mortgage after an IVA
What is your Credit Rating like after an IVA?
After you have completed an IVA your credit rating will be still be poor. The record is only taken off your credit file on the 6th year anniversary of the Arrangement’s start date.
If you complete your IVA within 5 years or settle earlier the record will still remain on your credit file for the full 6 year term.
Even after the record has been deleted from your file your credit rating does not suddenly become good. If you apply for it you are still likely to struggle to get new credit at this stage.
The reason for this is there is no history on your credit file of responsible credit usage. This needs to change if you want to repair your credit rating quickly.
How to start the Credit Repair process
Once your IVA is completed you can start the credit repair process straight away. This is the case whether the record has already come off your credit file or not.
Firstly you should check if any Default Notices or CCJs were issued against you and the date this happened. It is common for them to be issued after the start date of your IVA. You can check this by getting a copy of your credit file.
Default Notice and CCJ records also remain on your file for 6 years. If they were issued after your IVA then unless they are dealt with they will extend the period during which poor records affect your credit rating.
To resolve this issue you must contact the relevant creditor. Ask them to change the status of the account to satisfied and the issue date to no later than the start date of your IVA. They are required to do this under the Data Protection Act.
The records on your credit file might also suggest that any CCJ or Defaulted accounts are still active. The creditors are required to mark these as satisfied or partially satisfied once your IVA is completed.
Use a credit repair Credit Card
Making sure that Default Notices and CCJs are correctly recorded on your credit file is important. However your credit rating will only repair significantly when you start to build up a new history of responsible credit usage.
The question is how do you do this if you cannot get new credit facilities? A good way is to use a credit repair credit card. These cards are offered to people with poor credit ratings so applying should not be a problem.
You must only use the card for small purchases. Things like shopping or petrol which you can pay back in full at the end of the month. This will ensure you do not have to pay interest. This positive repayment history will be recorded on your file and help repair your credit rating.
To avoid high interest charges you must ensure that you pay off your credit repair card balance in full when the statement comes through.
Getting a Mortgage after an IVA
One of the things you may be interested in after an IVA is your ability to get a mortgage. You may already be a home owner and want to move. Alternatively you may want to buy your first property.
It is possible to do this after your IVA is completed. Mortgages are available even within 6 years of the start date of the Arrangement. Between 3-6 years from the start date you will need a cash deposit of at least 15%. After 6 years this could fall to as low as 5%.
The the rate of interest you are likely to be charged on your mortgage will be higher because of your IVA. It is therefore important that you ensure you can afford the repayments.
If you want to apply for a mortgage you will need to speak to a specialist broker. Give us a call or complete the form below and we will put you in contact with a broker who can help.