www.iva.co.uk

Sorry, more questions. Can you improve your credit score whilst in an IVA? Also how do you improve it after being in an Iva?

Whilst you are in an IVA there isn't a lot you can do to your credit score to improve it.

Once finished, as long as things like mortgage/rent, bank accounts and mobile phone contracts have been kept up to date then this will all help.

Otherwise, until the 6 years is up then your credit rating is shot.

So what happens after the 6 years are up?

Your IVA will drop off the record. Once you have completed your IVA you need to check your credit record with the three agencies - Call Credit, Equifax and Experian. If any of your creditors have added defaults after the date of the IVA, you need to write to them and tell them to remove the defaults as they are not allowed to add them.

In a recent TV programme a senior executive from Experian advised a discharged bankrupt to get a credit card after the 6 years was up, irrespective of the APR (he got one charging around 36%!). Spend around £50 per month paying off the card by direct debit each month (thus no interest paid). In this particular person's circumstances Experian estimated that his credit score would be 999 (the maximum) after 1 year. He also advised against attempting to get credit before the 6 year date as each unsuccessful application is recorded and adversely affects your score. (I posted this previously on a different thread, so apologies if anybody is suffering from deja vu but I thought it may be of interest to Kelse!!)

I saw that programme too.

The trouble is once you obtain the credit card, you have that spending power again, and if you can't resist the urge to use it, then the problems start again. I personally will not have another credit card for as long as i am alive.
As Kallis3 says, your mortgage,rent,phones will help rebuild the credit record. I will try to improve mine by that way. But to be honest, the only credit i will wish to have is my mortgage and possible a car in 5 years.
Starting to use a credit card is a dangerous game and is what got most of us into trouble in the first place.

So true, and ever rising interest on them.

Mickeyboy, I'm entirely in agreement with you - I will certainly not be seeking any credit once my IVA is finished. However, the point I was making which came a a surprise to me, was how quickly it is possible to build up to a perfect credit score.

With regards to the high interest rate credit cards and that 'spending power' you would probably not get much more of a credit limit than a couple of hundred quid anyway so is probably a usefull tool for someone who doesnt have a mortgage or mobile and may find it beneficial to rebuild there credit.

yes Johnh, i see what you getting at and yes it is amazing how quickly you build your credit rating.


Loneranger, i quite agree with you that you would only get a small limit at first, However, knowing banks, if you spent your £50 per month and repaid it back fully every month, would you suppose that the limit would stay low. Once they see you repaying in full each month, they will increase the limit as they want you to have debt. If you pay in full every month they don't earn money from you.

The banks did very nicely out of you last time around they WILL try it again. Remember, sales bonuses are not affected by the rate of defaults!

I shan't be going for any more credit cards, that's for sure. The amount of disposable income we will have once the IVA is finished will enable us to save for anything we want.

It's amazing to see just how much disposable you have when you budget properly. If only....

It's taken me till now to learn how to budget properly - prior to this it was always to go for more credit if I wanted something.

Now, it's save up for it, search for bargains on Ebay (got a brand new T shirt yesterday as a pressie for 15p!) or don't have it!