An individual voluntary arrangement (IVA) has the potential to significantly affect both your professional and personal lives, potentially resulting in a negative impact on your credit score. 

However, an IVA can be useful for improving your financial situation if managed effectively. By diligently meeting your IVA obligations and rebuilding your credit history, you can eventually achieve debt relief and regain control of your finances.

What is an IVA?

A technique to cope with debt you find challenging to repay is via an individual voluntary agreement (IVA). It’s a contract that outlines when and how you will make payments to your creditors (the companies you owe money to). 

You may offer to pay them a flat amount or give them a portion of your monthly earnings. Creditors could offer to forgive a part of your debt in exchange, allowing you to avoid paying the whole amount due.

Is an Iva Right for Me?

An IVA is only available to specific individuals. The Agreement must cover at least 75% of your debts, and all applicable creditors must approve it. 

Some debts, such as school loans, penalties, and child support, cannot be included. You cannot get an IVA if you reside in Scotland, but you may be able to obtain a Protected Trust Deed, which is comparable.

You must pay an authorised insolvency practitioner (often a licensed lawyer or accountant) to establish an individual voluntary arrangement. Although some practitioners may include this in the Agreement, their costs may range from £5,000 to £10,000.

Be aware that there are some options for handling debt, such as bankruptcy and Debt Relief Orders. Consult with a free, impartial debt advisor if you need assistance with debt repayment.

What Is Credit Score and What Does It Represent? 

Your credit score, which consists of three digits, is a gauge of your level of personal financial responsibility. It’s a projection of your ability to repay loans with reasonable consistency. 

Your credit file records your financial transactions over the last six years.

Every credit transaction you make is recorded in your credit file. 

Your credit file will reflect this if you repay the loan on time and in full, and your credit score will rise.

However, if you need to make payments and are careful about repaying your debt, this will also be included in your credit file, lowering your credit score.

Credit reference organisations assemble your financial history to create your credit report, which they then use to calculate your credit score. 

Lenders check your credit record whenever you apply for a loan, credit card, or any other sort of credit to determine how hazardous of a borrower you will be.

Having excellent credit will make it much easier for you to get credit. Most conventional forms of credit may be difficult to accept if you have a poor credit score.

You could have to work with specialist lenders charging you very high-interest rates if your credit score is poor. You should first obtain expert guidance if you are concerned about how an IVA would influence your credit ratings.

How Will an Iva Affect My Credit Score? 

IVA debt advice can have a significant impact on your credit scores. When you seek IVA debt advice and establish an IVA, it will be reflected in your credit report. This information can harm your credit score.

Including an IVA in your credit record can challenge obtaining credit worth more than £500. It indicates to lenders that you have struggled with debt repayment and may pose a higher risk for future credit.

The presence of an IVA on your credit report can make it difficult to access loans or other forms of credit. Lenders may view you as a higher-risk borrower and may be less willing to approve your credit applications.

It’s important to note that an IVA will remain on your credit record for six years from the date it was registered, even if the IVA itself lasts for a shorter duration, such as five years. After completing the IVA, it will still be visible on your credit file for 12 months.

While IVA advice may harm your credit rating, seeking professional advice and exploring all available options to manage your debt effectively is essential. 

Working with a reputable debt advisor can help you understand the potential consequences and develop a plan to improve your credit over time.


Companies may contact you if you need help making payments with the offer to assist you in paying off your debt. 

They could slap you with high fines, and you might wind up with extra debt and a tarnished credit history.

A far safer choice is often to seek help from a reputable, non-profit agency. StepChange and National Debt Line are two examples. 

These nonprofits may advise you on debt management strategies like a debt management plan or an Individual Voluntary Arrangement, which will likely harm your report and score.