Tax Liens And Your Credit Score

Written by mrcredit101
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Have you ever had a tax lien levied on you in the past? Has that lien been paid off or is it still current? A tax lien, whether past or current, will definitely hurt your credit score. This may be one reason why the free credit score you see when you view your credit reports online is so low. You've got to make sure tax lien information on your credit reports are updated if you want to improve your credit score.

First, you'll have to pay off all your outstanding tax liens. After these are paid, the IRS will send you a Certificate of Release of Federal Tax Lien. You should get one certificate for each office where you have a lien on file: the Federal District Court where you live, and the clerk of your city, town or county. To make sure that you have a Certificate of Release for all the liens filed, you'll need to do a lien search.

There are several ways through which you can search for your tax liens:

- Ask the IRS agent for copies of every lien that the IRS has filed against you.

- Engage the services of a commercial lien search service. This firm combs through public records to look for your liens. You will have to give them the details of every place you've lived and worked since your tax troubles started, as well as change of name (if any).

- Check your credit report to see what tax liens are reported.

- Do a search at the public records office. Ask the staff for assistance if you need help.

After you've identified all your recorded tax liens, make sure the IRS issues a Certificate of Release for each one. Don't expect the IRS to do this automatically; you will have to follow this up yourself in order to get your credit rating back on track.

Review your credit reports again and double check the tax liens recorded on your report. If there are liens that are already paid but which are noted on the report as still outstanding, ask the credit reporting agency to contact the IRS or check the public records to confirm the lien's release. You can send them copies of the Certificate of Release of Federal Tax Lien as proof. Then, follow up each credit bureau to make sure your credit reports and credit scores are updated.

If you have a current tax lien but are paying the IRS in installments, you can still boost your credit rating even if the lien isn't fully paid. You can submit a statement about the arrangement with the IRS to the credit bureaus, and ask that this accompany your credit report. Because you have an arrangement with the IRS and are in the process of paying off the lien, your credit report can reflect that the lien will be discharged in the future.

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submitting a statement of arrangement to credit bureaus

Good point. Tax liens being paid off is something we sometimes overlook when it comes to its impact on our credit score. I especially like the tip about submitting a statement of arrangement with the IRS to the credit bureaus, because it puts things on record even before the lien is paid off. Thanks for sharing, Jake with