- 07
- Jun
A guide published with help from the Insolvency Service explains what an IVA is and the processes involved in setting one up. It also explores the long-term impact IVAs have on a consumer’s credit report.
Jill Stevens, Director of Consumer Affairs at Experian, said: “An IVA appears on your credit report for at least six years, so even after your IVA ends, typically after five years, you might continue to experience difficulties getting credit and other financial services because you entered into an IVA in the past. If you are granted credit, the chances are that the lender will see you as a very high-risk customer and will charge you a higher rate of interest as a result.
“While an IVA may be the best option for some people, it should only ever be considered after receiving impartial advice from a responsible organisation such as Citizens Advice, the Consumer Credit Counselling Service, National Debtline or the Insolvency Service.”
Joanna Elson, Chief Executive of the Money Advice Trust, commented: “IVAs are only appropriate for a small proportion of people and this route should only be entered into after receiving best advice from a reputable source. It is vital that people are fully advised on the costs and implications of entering into an IVA, particularly if there could be a risk to their mortgaged property.”
Martin Hagerty, Head of Retail Credit at HSBC Bank plc, commented: “HSBC has harboured concerns for some time about the level of potentially misleading advertising, encouraging borrowers to enter an IVA, when it may not be in their best interests. We fully support this Experian initiative and echo the advice for those with financial worries to take impartial advice or speak openly with their lenders as a first step. An IVA may work for some but can also have serious long-term implications for an individual’s credit rating.”
