How Can a Federal Tax Lien Affect Your Credit Score?
A loan can come in handy if you’re low on cash and need to pay for something right away. It also helps to pay for big purchases such as a house or car. Receiving a loan isn’t a hard process. However, it could be if you have bad credit. If you have a tax debt,you might have received a federal tax lien. A tax lien can have a negative impact on your credit score.
What is a Credit Score?
A credit score is a specific number that is calculated based on information in a credit report. Every time you take out a loan or make a loan payment, it is recorded on your credit report. The leading credit score in the industry is FICO and ranges between 300-850. Your credit score determines how likely you are to get approved for a loan or not. It’s important to know that your credit score will follow you forever, and may affect your finances negatively or positively.
Why is a Good Credit Score Important?
Before you buy a house, sign a lease to rent an apartment or even apply for a credit card, your credit score will be checked. A good credit score indicates if you’re a trustworthy borrower or not, and can result in interest rate savings as well.
How Can a Tax Lien Affect My Credit Score?
Someone who has an outstanding tax debt receives a federal tax lien by The Internal Revenue Service (IRS). A tax lien gives the IRS the right to claim certain property such as homes, cars, buildings, equipment, jewelry, money etc. The taxpayer is given 10 days after a letter is sent to follow-up with the intent to repay debt. If the taxpayer refuses to pay before the 10 days are up, a Notice of Federal Tax Lien is sent to creditors to inform them that the IRS has the right to possess taxpayer’s property.A federal tax lien can decrease your credit score, making it difficult to receive loans in the future.
The best way to avoid this is to not have a tax lien in the first place because once it’s listed in your credit file it becomes public record. Regardless if a tax lien is paid or not, it remains on file for years. Not only can this financially set you back but prevents you from having the future you’ve always dreamed of as well.
I Have a Tax Lien, Now What?
If you have a tax lien, there’s no need to panic. Success Tax Relief’s team of debt relief professionals has the experience to help resolve your tax debt situation. If your credit has already been affected by a tax lien there is hope. Success Tax relief has a team of professionals ready to help get your credit score back to normal. With years of experience helping clients live debt free lives, we know how to handle any tax problem. Call us now at 877-825-1179, or schedule for a free consultation online.