Can You Pass a Credit Check with an IVA?

For anyone considering entering in to an individual voluntary arrangement (IVA), it’s important to understand both the purpose of an IVA and how an IVA will impact your finances. An IVA is a debt solution. It ‘s designed to help people get out of debt while also giving a fair outcome to creditors via an agreed monthly repayment arrangement.

Having an IVA signals that the debtor has been unable to repay their debt via the initial contract, that is, they have missed payments, are unable to pay their debts, and are insolvent. How does that impact someone’s credit rating? Can you pass a credit check with an IVA?

Will I Fail a Credit Check with an IVA?

The purpose of a credit check is to show whether someone is likely to be a high or low risk financially. Information about financial behaviour can help potential creditors decide where you fit in terms of risk. So can you pass a credit check with an IVA?

There are two types of credit checks: a hard credit check and a soft credit check. As explained by the credit broker Experian, you can’t fail a soft credit check. They’re designed for you to check your own credit rating so you can see how eligible you are for a range of credit options without applying. You can do a soft credit check as many times as you like without it affecting your credit score, and you can’t fail it even with an IVA.

The other type of credit check, a hard credit check, is another matter altogether. It’s usually used when you have applied for credit, or wish to enter a financial commitment such as through a utilities company, or in some cases apply for a rental property or employment. Each time you apply for a hard credit check, it’s registered on your credit file and can lower your credit score. This is the credit check that matters if you are wondering can you pass a credit check with an IVA?

Any debt will register on your hard credit check. That includes your individual voluntary arrangement (IVA). While you can’t legally borrow more than £500 without your insolvency practitioner’s written consent with an IVA, it’s very unlikely that a creditor would consider you favourably during the lifetime of your IVA. So, can you pass a credit check with an IVA? No is the most likely outcome. Can you still get rental accommodation or utilities? That will depend on the service providers, but it could result in a larger deposit to help offset perceived risk.

How Can Irwin Insolvency Assist with Your IVA Concerns?

Navigating all the considerations for your debt solutions can be challenging. Having experienced insolvency experts on your side can take all the guesswork out of understanding your IVA.  Contact Irwin Insolvency today for professional tailored advice for individual voluntary arrangements.