Individual Voluntary Agreement Credit

Individual Voluntary Agreement Credit

Today, almost each one of us is making use of credit cards for shopping and for making payments as well as for other reasons. The credit card plays a very important role in our daily lives and is a good way of making payments, especially if you are averse to carrying money on your person. However, those who become careless with their credit card usage can find that their credit card debts can become unmanageable. This is when they will need to think about using individual voluntary agreements and they will, if they choose this option, also need to find out about individual voluntary agreement credit ratings.

Individual voluntary agreement – negative credit ratings

It is important to understand the implications of individual voluntary agreement credit ratings. The first thing that you will come to understand is that individual voluntary agreement credit ratings will become negative as soon as you enter into an individual voluntary agreement. This is because as soon as a debtor starts to pay off their individual voluntary agreement their individual voluntary agreement credit ratings are going to drop. Once the agreement has been completed or after it expires, then your individual voluntary agreement credit ratings are going to return back to their normal levels.

Term of the individual voluntary agreement

In most cases, it takes five years to complete an individual voluntary agreement. Once this agreement has been completed, the debtor will then receive a Certification of Completion which they must then forward to all the main credit agencies. Doing so can help to improve their individual voluntary agreement credit ratings.

Negative effect

However, during the lifetime of the individual voluntary agreement, the individual voluntary agreement credit ratings of the debtor are going to be negatively affected but this will not prevent the debtor from applying for a new unsecured loan. the fact of the matter is that even during the agreement period, the individual voluntary agreement credit ratings may be low but the lower credit score will not matter all that much.

It is however important to enter into an individual voluntary agreement only if the debtor is sure that they have sufficient funds with which to continue making the repayments over the entire period of the individual voluntary agreement. If the debtor is not able to fulfill their monthly payment obligations, then not only will their individual voluntary agreement credit ratings nosedive but the agreement may turn into an unwanted bankruptcy.

The good news for those who are planning to enter into an individual voluntary agreement is that by doing so there will be a much lesser impact on their individual voluntary agreement credit ratings as compared to what happens to their credit ratings if they choose to file for bankruptcy. However, even though your individual voluntary agreement credit ratings will fall, you can still continue to make use of your prepaid cards. The only trouble is that low individual voluntary agreement credit ratings will prevent you from obtaining fresh unsecured credit.

So, you will need to wait for five years or until the payments have been made before you can expect to have your individual voluntary agreement credit ratings rise once more.

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