How Does a Tax Lien Affect My Credit Score?
A lot more people than you might think don’t file their taxes on time. Reasons range from simply not being able to pay due to genuine financial difficulties, to simple forgetfulness. Sadly, failure to pay will likely result in a tax lein being leveled against you, but how does a tax lein affect credit score information on your credit report? Likewise, what can you do about tax lein information on your credit report and how long does a tax lein stay on your credit report file?
Does A Tax Lein Affect Credit Score?
Does a tax lein affect credit score? Yes. A tax lein can be issued on a local, state, or federal government level and is the government’s way of asserting a claimable interest against your property and assets due to unpaid tax arrears. How does a tax lein affect credit score information? Typically tax leins are only issued when amounts of unpaid tax exceed $10,000 or more. In this case any kind of tax lein information on your credit report tells potential future creditors (and in some cases employers) that you have a significant amount of unpaid debt which you are having difficulty servicing or simply refusing to make repayment of.
How Long Does A Tax Lein Stay On A Credit Report?
Under federal law a paid and released tax lein must be removed from your credit report seven years after being originally filed. However, federal law also stipulates that unpaid tax leins can remain on credit reports indefinitely. In this case, it is important to settle and repay tax leins as expeditiously as possible. However, it is worth noting also, that many credit bureaus remove even unpaid tax lein information from credit reports after a period of about a decade or so. Whether they do though, is entirely at individual credit bureau’s discretion.
What To Do About Tax Lein Data On Your Credit report
When you are wondering what to do about tax lein information on your credit report, you need to understand why it is there. Many people for instance, assume that just because they have fully serviced and been released from an outstanding tax lein, it will be automatically removed. Sadly this is not the case. The best thing which you can do to help better your credit score after fully servicing a tax lein, is contact the credit report bureaus themselves and ask that they add a note to your file explaining any extraneous circumstances which lead the a tax lein being issued in the first place.
Alternatively, if you are wondering what to do about tax lein information on your credit report pertaining to paid and released tax leins older than seven years, it is worth noting that in this case you have legal grounds to file disputes with credit bureaus themselves in order to force them to remove this information.