What Should You Do When a Tax Lien Appears on Your Credit Report?

Tax liens no longer appear on your credit report, as they once did. Up until 2017, past-due tax liens were shown on your credit report for more than ten years. Even though you paid a lien, it remained on your credit record more than 7 times. Nonetheless, there were problems with liens being accurately reported.

Several people with impeccable payment records had someone else’s lien incorrectly listed on their credit report. Hence, by April 2018, the three major credit bureaus (Equifax, Experian, and TransUnion) had eliminated all tax liens from credit reports. So, the main point is when does the IRS file a tax lien so that people can avoid it?

The IRS will file a tax lien if you owe them money and neglect the debt for an extended period. In some cases, tax liens won’t appear on your credit record. Yet, the lien may be listed in public records, which could damage your credit.

  • If a lender looks through the public records and discovers an outstanding lien in your name, it can hinder your ability to acquire a loan, even a credit card.
  • Also, if a lien was filed because a bill wasn’t paid, that bad payment history will be reflected on your credit report.

Tips to Remove it From Credit Report

  • If a tax lien was issued by the federal government and it appears on your credit report, you can have the lien withdrawn and erased once the tax debt has been paid.
  • If your tax liability is settled, the IRS promises to remove the lien within 30 days. However, to be eligible for the 30 days, you must have filed your tax returns three years in the past, or you must demonstrate that you were exempt from filing under federal regulations.
  • Also, you need to pay off any outstanding federal tax deposits and projected levies.

The only way to stay lean is by paying your taxes every year and clearing your debt diligently. If you can’t pay all at once, you can also go for payment schemes.

Comments are closed.