Is an IVA an easy way out of debt?

IVA's are not the easy option you might think. Although some people may end up paying less through an IVA, the debt is not necessarily written off.

An IVA should only ever be considered as a last resort and after receiving impartial advice. The IVA will appear on your credit report for six years and it is just as likely that you will struggle to get credit in the future as if you had opted for bankruptcy.

A credit card company allowed me to get thousands of pounds into debt when I was signed off work with stress. What can I do about it?

The credit card issuer had no way of knowing about your illness if you or somebody acting on your behalf didn't tell them.

It allocated you a spending limit based on the information in your credit report, their past experience of you and the information in your application form - and presumably you had previously been a reliable customer, because you were able to spend quite a large amount.

Now you need to contact the card issuer and explain your circumstances. You will need proof from your doctor and they may also ask for evidence that you were not working when you ran up the debt.

They will help to come up with a solution to your problem, such as a schedule of repayments that you can afford.

This debt will be recorded on your credit report and could affect your chances of borrowing money in the future, so you should also contact Experian, the UK's leading credit reference agency. They will help you to add a note of explanation to your credit report, which lenders will see when they check it in response to any future applications for credit.

You should also check your credit report yourself, to see that it has been updated and accurately reflects your circumstances.

How can you improve your credit score?

Lenders use credit scores to assess the risk that you will not repay what you owe. A credit score is a mathematical calculation based on information from two main sources - your credit report and your application. Each piece of information is allocated a value and each lender uses its own formula to calculate a number that represents the risk you represent. Sometimes the same lender will use a different formula for different products, for instance a car loan versus a mortgage.

In general, the higher the score, the better your chance of getting credit on favourable terms.

Your first step towards improving your credit score is to check your credit report to make sure that it is up to date and accurately reflects your circumstances. If you find anything that is out of date or that you believe is inaccurate, contact the lender or court that supplied the information, giving proof if possible, and ask them to make an amendment.

If there's something that needs further explanation, you may be able to add a note of explanation that lenders may take into account. You should also check that you are registered to vote at your current address, as lenders use the electoral roll to verify your identity. You could lose points if you don't appear or are down at an old address.

I have some large credit card debts and was thinking of transferring them to another credit card company offering 0 per cent on balance transfers. Will this affect my credit rating?

This is called credit card surfing / shifting your balance from one card to another to take advantage of introductory interest-free or low-interest offers. It should not harm your credit rating, as long as you always make your repayments on time and don't do it too often.

Remember that your application for a new card might not always be accepted and that lenders don’t like to see evidence of a series of applications on your credit report - they can think you are desperate for money or even that a fraud is being planned.

You can see your Experian credit report for free with a 30-day trial of .