Credit Score Low? Have a Tax Lien?

Have you checked your credit score lately? If a tax lien had made its way onto your report, a new policy may have recently bumped your score up.

What Is a Tax Lien?

A government (at the federal level, the Internal Revenue Service) will sometimes place a claim on an asset of a person who failed to pay taxes. The effects can be hard to handle. A homeowner might need to sell or refinance, and be blocked from doing so before making good on the lien against the property. 

Of course, some kind of consequence will follow non-payment of taxes. Sometimes, though, people who timely filed and paid all their taxes discover some mystery tax lien impacting their credit score. 

Do Errors Lurk in Your Credit History?

Mistakes in credit reports happen to a lot of people. In 2012, the Federal Trade Commission found errors in more than a fourth of credit reports. 

Some of these errors involve the reporting chain from public records through the credit bureaus. Civil court judgments and liens especially have caused many inaccuracies in credit reports. 

After focusing a study on public records data, the Consumer Financial Protection Bureau uncover issues with the way Experian, Equifax, and TransUnion processed documents such as Notices of Federal Tax Liens. Cases of mistaken identity were not uncommon. 

What is Changing Between Tax Debts and Credit Scores?

Last year, the credit bureaus began following new rules on entering tax liens onto consumer credit reports. 

And from April 16, 2018 on, all three companies will remove any remaining tax lien information from consumer credit reports. Although everyone is not affected in the same way, the new rules have changed some 5.5 million credit reports. 

No, the liens themselves are not erased. But the credit bureaus stopped using them to lower credit scores. 

Support for Disputes

Do you have a tax or credit dispute? Both? Consider hiring a tax attorney to help resolve it in the best way possible. A tax lien may make it very difficult to apply for a credit card, car loan, home equity loan or to refinance. Even though it may not affect your credit score, a tax lien is still public record. By that point, lenders are hesitant to loan you any money. A well-informed tax law professional can help you achieve lasting improvements in your financial health. 

If you've had a lien placed on your property already, or if you've been served a Notice of Federal Tax Lien and you know that trouble's just around the corner, I may be able to help. Call Travis W. Watkins Tax Resolution and Accounting Firm at 800-721-7054 today for your free no-strings-attached consultation.

Are you ready to think more clearly, take positive steps to solve your problems, and find creative ways to deal with the IRS? Download our FREE book, The Ultimate Survival Guide for IRS Problemshere!

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