Tuesday, September 15, 2015

How Will a Tax Lien Affect Your Credit Score?

Tax liens are no joke. Aside from threatening your properties and assets, a tax lien can also make your credit look even worse. Having debts is bad enough, but a lien that appears on your credit file could really set you back. Once the IRS files a lien against you, your credit score will take a considerable hit that it would be difficult for you to ever obtain a loan. 

Tax Liens on Your Record

Under the laws set by the Fair Credit Reporting Act (FRCA), the credit reporting agencies (CRAs) must include the tax lien in your credit report. Unpaid tax liens can potentially remain on your file permanently unless the CRAs drop it or you have paid the full amount. CRAs do have the tendency to drop liens from an individual’s report after about 10 to 15 years but that is a long wait. Even if you do pay in full, it will not make the lien disappear immediately from your records and may remain there for 7 years. 

Avoiding Tax Liens

The best way to avoid tax liens is to just pay the amount you owe the IRS before they file. Usually, there are time constraints involved in this, so you should always turn to a tax lawyer who can help you respond to a tax lien and provide you with several options for debt relief. If it is too late, you can always try to get the IRS to withdraw the lien, also with the help of a lawyer.

No comments:

Post a Comment