We often get calls from taxi drivers who they have used our free credit checker, but whose ‘soft credit search’ indicates that, unfortunately, they can't get finance at this time. It is very often because the driver is under an IVA. Read on to learn what to do if you're in this position.
An individual voluntary arrangement (IVA) is a formal alternative to bankruptcy. It’s a repayment agreement, and can be quite flexible, depending on your own circumstances. IVAs take into account any capital you own, income, third-party payments and so on. Avoid bankruptcy if you can — it leaves a very negative mark on your credit scoring. IVAs are less punishing.
We do understand how frustrating it can be when taxi driving is your main source of income, but you can’t get a new taxi on credit, so you can’t work. But it’s not legal for our partners to arrange credit finance to someone currently under an individual voluntary arrangement.
Unfortunately the lenders look at the numbers in black and white and simply won't consider your personal circumstances.
The information held on your credit file is used to decide:
IVAs will stay on your credit file for six years. However it is quite unlikely that you will be accepted on a HP agreement (we only do HP here at The Taxi Shop) as it is normally quite a large lend.
The way to build your credit rating back up is borrow small amounts, repay them on time every time. Slowly borrow more, pay it back straight away, and prove that you're committed to repaying loans.
You might need to wait between six to 12 months borrowing and regularly making repayments, with no slip ups, to prove you're once again creditworthy. It is a very frustrating process but this is the advice we have been given from our motor credit partners.
It’s also important to be able to show strong accounts to lenders. We all know one of the attractions of taxi work is that it’s a cash business. But you’ll need to put plenty through the bank to demonstrate that there’s a good chunk of spare money at the end of every month.
Find your credit score with one of three main agencies in the UK: Equifax, Experian, Callcredit, each of which charges for their services. There are other agencies that are free, but are slower. If you’re struggling to improve your score, it might be worth considering signing up to a one month free trial membership offered by the main credit agencies. Using an agency means you can keep a close eye on your credit score and deal with an issues.
Follow these tips to improve your rating:
We can’t guarantee to provide you with finance for your next taxi. But sticking to the advice above has definitely helped past customers who have gone on to buy from us.