No More Credit Score Impact: Tax Liens Now Removed from Credit Reports

American taxpayers who have an unpaid tax lien may be concerned about its impact on their credit score. A tax lien is a legal claim by the government against a taxpayer’s property when taxes are not paid. This claim protects the government’s interest in the taxpayer’s assets, including real estate, personal property, and financial assets, according to the official website of the IRS on December 22, 2022.

A quality credit score is one of the most valuable assets a real estate investor can have. (Photo: www.fortunebuilders.com)

Before 2017, tax liens had a negative impact on a taxpayer’s credit score. However, the three major credit bureaus—Experian, Equifax, and TransUnion—announced that they would remove all tax liens from credit reports. This change applies to both tax liens filed before and after 2017.

Even though tax liens no longer affect credit scores, they can still impact a taxpayer’s finances. Tax liens can limit a taxpayer’s ability to secure loans or open lines of credit. For this reason, it is important to make prompt payment of taxes and avoid liens.

If a tax lien is listed on a credit report, it can be disputed and removed. To do this, the taxpayer must notify the appropriate credit bureau of the inaccuracies. The three credit bureaus offer simple online dispute procedures, and many disputes can be resolved in a matter of minutes. The credit bureau has 30 days to respond to the dispute and correct any inaccuracies, as reported by Marca on December 29, 2022.