Rebuilding Your Credit After IRS Debt: Dos and Don’ts

Delinquent IRS debt may negatively impact your credit score even after it has been settled or paid off. A low credit score can make it difficult for you to buy a house, finance a car or get a loan. Follow these tips to improve your credit score.

Check Your Credit Report

The IRS won’t report your delinquency to the credit agencies until and unless they place a Federal tax lien against you, explains TurboTax. If you made and honored a repayment plan, you might find that the IRS did not report the delinquency to the credit bureaus.

See whether there are erroneous claims on your credit report by ordering a copy, which you can do for free each year through Work with the credit agency to repair any errors and raise your score.

Don’t Apply for a Lot of New Credit

Once your credit score plummets, you may receive offers for credit cards designed for people with poor credit. Avoid signing up for these offers. First, they may cost you a lot of money in annual fees and high interest rates. Second, applying for (and getting) several credit cards can lower your credit score. If you need to apply for a credit card, limit yourself to just one and carefully check the terms.

Manage the Credit You Already Have

Continue paying your mortgage, car payment, loans and credit cards. By properly managing the credit you already have, you may raise your credit score over time. Do not get behind on these payments. Each time you are 30 days late, your creditors can report the delinquency to the credit agencies, which further reduces your credit score.

If you are not sure how to handle your existing IRS debt, Highland Tax Resolution can help. Call us today at 720-398-6088!