Kudos has partnered with CardRatings and Red Ventures for our coverage of credit card products. Kudos, CardRatings, and Red Ventures may receive a commission from card issuers. Kudos may receive commission from card issuers. Some of the card offers that appear on Kudos are from advertisers and may impact how and where card products appear on the site. Kudos tries to include as many card companies and offers as we are aware of, including offers from issuers that don't pay us, but we may not cover all card companies or all available card offers. You don't have to use our links, but we're grateful when you do!
Does an IVA Affect Your Credit Score?
July 1, 2025
Quick Answers
An Individual Voluntary Arrangement (IVA) is a formal insolvency solution that will be recorded on your credit file, significantly lowering your credit score for its duration.
The record of the IVA remains on your credit report for six years from its start date, making it difficult to obtain new lines of credit during this period.
After the IVA is completed and removed from your file, you can begin the process of rebuilding your credit rating, providing a structured path toward financial recovery.
What Is an IVA?
An Individual Voluntary Arrangement, or IVA, is a formal and legally binding agreement between you and your creditors to repay your debts over a set period. This arrangement serves as an alternative to bankruptcy in England, Wales, and Northern Ireland for individuals with unmanageable debt. An Insolvency Practitioner (IP) will work with you to propose a manageable repayment plan to your creditors, and if they agree, the IP will supervise the IVA for its duration.
An IVA is recorded on your credit file and will remain there for six years from the date it begins, which affects your credit score. During the term of the IVA, obtaining new credit will be challenging due to this public record. Once the IVA is successfully completed and removed from your credit report, you can begin the process of rebuilding your credit history.
How an IVA Can Affect Your Credit Score
Entering an Individual Voluntary Arrangement (IVA) will have a significant impact on your credit score. It is recorded on your credit file, signaling to lenders that you have previously struggled with debt.
Initial Recording: When your IVA is approved, it is recorded on your credit file. It will also be added to the public Insolvency Register, making the information accessible to lenders and credit reference agencies.
Immediate Score Reduction: The appearance of an IVA on your report will cause your credit score to drop substantially. Lenders view it as a serious negative event, indicating a higher risk of default.
Restricted Credit Access: Throughout the duration of the IVA, which is typically five to six years, your ability to obtain new credit will be severely limited. Any applications are likely to be declined.
Record Duration: The IVA will remain on your credit file for six years from the date it began, regardless of when you complete your payments. It will continue to affect your score during this entire period.
Post-IVA Rebuilding: After the six-year period, the IVA is removed from your credit report. At this point, you can begin the gradual process of rebuilding your credit score by demonstrating responsible borrowing habits.
How Much Will an IVA Affect Your Credit Score?
An Individual Voluntary Arrangement (IVA) will have a significant impact on your credit score. Here are the key factors to consider regarding how your credit rating will be affected.
- Initial Credit Score Drop: An IVA is recorded on your credit file, causing an immediate and significant drop in your score. This notation signals the seriousness of the debt agreement to potential future lenders.
- Duration of Impact: The IVA remains on your credit report for six years from its start date. Throughout this period, accessing new lines of credit will be extremely challenging.
- Rebuilding Your Score: Once the IVA is completed and removed from your record, you can start rebuilding your credit. Consistently managing any new credit responsibly will gradually improve your score over time.
How You Can Avoid an IVA Affecting Your Credit Score
Consider a Debt Management Plan
A Debt Management Plan (DMP) is an informal agreement to manage non-priority debts. While it still impacts your credit rating because you're paying less than agreed, it's often viewed as less severe than an IVA and isn't entered on a public insolvency register.
Negotiate Directly with Creditors
Approaching creditors directly to negotiate a new payment schedule is another option. If they agree to freeze interest and accept lower payments, this can be a more flexible arrangement that avoids the formal, long-term commitment and public record associated with an IVA.
Explore Debt Consolidation
A debt consolidation loan could be a viable alternative if your credit is still in fair shape. This involves taking out a new loan to pay off existing debts, leaving you with one manageable monthly payment. It can prevent the need for formal insolvency.
Choose the Right Card to An IVA
Improving your credit score is an achievable goal that relies on consistent, positive financial behaviors. According to one expert guide, most people can see meaningful changes within three to six months by taking the right steps.
- Monitor your credit reports. Regularly check your reports from Experian, TransUnion, and Equifax to identify and dispute any inaccuracies that could be harming your score.
- Make on-time payments. Set up automatic payments for your bills, as payment history is the most significant factor influencing your credit score.
- Lower your credit utilization. Aim to use less than 30% of your available credit by paying down balances or requesting credit limit increases.
- Become an authorized user. Being added to a credit card account with a long history of on-time payments can help improve your own credit profile.
- Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as credit cards, installment loans, and mortgages.
- Limit hard inquiries. Avoid applying for too much new credit at once, as multiple hard inquiries in a short period can temporarily lower your score.
The Bottom Line
An IVA is a formal insolvency process that will appear on your credit report for six years. This will lower your credit score and make it harder to get approved for credit.
Frequently Asked Questions
How long will an IVA stay on my credit report?
An IVA is recorded on your credit file for six years from the date it begins, even if you complete it sooner than the typical five-year term.
Can I get credit while I’m on an IVA?
You must get permission from your Insolvency Practitioner to take out new credit of over £500. Doing so without approval can violate your IVA's terms.
How can I rebuild my credit score after an IVA?
Once the IVA is removed from your report, you can start rebuilding your score by using credit responsibly, such as with a credit-builder card, and making all payments on time.
Supercharge Your Credit Cards
Experience smarter spending with Kudos and unlock more from your credit cards. Earn $20.00 when you sign up for Kudos with "GET20" and make an eligible Kudos Boost purchase.
Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
