Your credit score plays an important role in your life. It determines the interest rate you’ll have to pay on car loans, home mortgages, etc. In addition, insurers may factor in your credit score when they’re trying to decide your auto insurance rates. Potential employers might also check out your credit worthiness when making their hiring decisions.
If you owe more than $10,000 in back taxes to the government, the IRS will automatically file a tax lien against you, claiming its right to your property, your vehicles and other assets until you pay your debt to them. Currently, the major credit reporting agencies (Experian, Equifax and TransUnion) do include those tax liens on your credit report.
According to Experian, one of the three major credit reporting agencies, “Tax liens are considered very negative and can remain on your credit report longer than any other item. Unpaid tax liens remain part of your credit report for 10 years, and paid tax liens remain for seven years.”
But that will be changing as of July 1, 2017. According to a report in USA Today, the three agencies have said that they will no longer include tax liens on credit reports unless those liens include:
- The consumer’s name
- The consumer’s address
- The Social Security number or date of birth.
The agencies estimate that about half of all the tax liens don’t have all of that information.
CNBC reports that the change came about because of an agreement between the three credit reporting agencies and the attorneys general from 31 states. The states were concerned because the information on the tax liens (and on civil judgments and medical debts, which will also disappear from credit reports) was often wrong.
According to a statement from the Consumer Data Industry Association, “The new standards will apply to new and existing public record data.” That means if you currently have an IRS tax lien on your credit report that’s missing any one of the three pieces of information, it should disappear after July 1.
Don’t expect a big change in your credit score if the IRS tax lien information does go away, however. The three credit agencies estimate that affected consumers may see only a 10-point increase in their credit score.
If you have IRS tax debt, or an IRS tax lien in place, give us a call at 720-398-6088.