The basic starting point when looking at credit ratings after an IVA is figuring out what is and what is not evident on the credit file. Things that go on your credit files remain there for six years only. An IVA normally runs for five or six years, so usually if VAT will not show on a credit file immediately after the completion of an individual voluntary arrangement.
Other things may appear on your credit file that should, or shouldn’t be there. Examples include default notices and credit balances. The rule in this connection is that the credit file information should be accurate. This means that soon after you complete the default VAT note (which should be dated at the beginning of your IVA or earlier) should be marked as being satisfied or somewhat satisfied, and balances due which were included in the VAT should not appear at all. You may need to contact some creditors to request that they update their entries.
With VAT is no longer evident on a credit report, default notices dated correctly having left as well and no debt included showing balances, you might assume that your credit report post – VAT looks perfect and that the loan will be easy to get. This belief is often reinforced by credit scores that credit reference agencies assigned to people, who are often quite high in these circumstances.
Unfortunately it is not so simple. The fundamental problem is that lenders do not solely rely on credit scores, with many using little or none of them. Can display them as an indication of the potential solvency after a VAT, but are no more. Creditors have their processes to decide that they want to lend to, processes that are based on their priorities and commercial lending experience.
For example, recent positive use of credit could be assessed by many banks that are scoring a credit application. Credit history may have nothing wrong, because VAT has been more than six years ago and default notices and clarified by possessions. But there is something good there? There is no evidence of a good track record of payments on credit used recently? Without any evidence recently that paying debts on time, possible future lenders may View as a quantifiable risk.
Did you use a payday loan? Some lenders might see the fact that you have used recently a payday loan and paid back completely as long as a good thing. It may make them more likely to give to you. Other lenders may think that with a payday loan is a sign of financial difficulties, potentially a sign that you’re a poor money manager and decide they don’t want to give it to you. We believe that making use of payday loans is inherently risky, especially after an IVA is finished.
Therefore, improve your credit score after an IVA must work on multiple levels. First you must make sure your credit report is accurate and reflective of the facts. Secondly you may need some time for things to drop-off six years later began the VAT. Thirdly, you must prove that you are a good loan prospect doing some positive use of credit (though care must be exercised in choosing what types of credit you use). Improve your credit score after a VAT is not impossible, but it does require some time and effort to get the job done right.