How Long Does a Tax Lien Stay on My Credit Report?

The government can issue a tax lien if you fail to pay your federal income taxes. This lien can be filed against your property and will remain until the property is sold or refinanced. If either situation takes place the lien will have to be paid off from the proceeds. A lien will reduce the amount of equity in your property. Not only will the lien show up as an encumbrance against your property but the information can be reported to a credit reporting agency.

A lien can remain on your credit report for seven years from the date the lien is paid off and not the filing date. Therefore if a lien is filed in 2008 and paid off in 2010, the lien will remain on your credit report for seven years starting from the 2010 date. If you decide to never pay off a lien it will remain on your credit indefinitely. There is no time limit for removing a lien from your credit report if it has not been paid.

If you have a lien reported on your credit report it will damage your credit rating severely. You credit score could also drop significantly. This is important because your credit score will determine the interest rate you are charge for many products and services. The higher your interest rate the more you pay in interest and finance charges. Over time this can prove to be a substantial amount of interest. This is especially true if you have received a higher rate of interest on your mortgage loan because of a higher credit score. You could end up paying thousands of dollars more because of a low credit score.

A tax lien can become serious business because it can affect not only the property you own now but property you purchase in the future. It is very important to resolve these matters as soon as possible which will enable you to avoid a lot of problems in future. Tax liens can also prevent you from purchasing other credit products such as credit cards, car loans or other credit products.

If after seven years a paid lien is still on your credit report you may want to contact the credit reporting agency and dispute the lien. The credit reporting agency will then contact the IRS to verify the time frames and have the information removed from your credit file.