A tax lien is one item that shows up in the public records section of your credit report--and this is never a good thing, indicates Experian's Maxine Sweet in a recent MSN Money report. This type of record can severely hobble your credit rating and make it difficult or impossible for you to get a loan for a home or car or any type of new credit, or even rent an apartment. What most consumers don't realize is that even after they pay a tax lien, the record remains on their credit reports for seven years after the date the lien is released. The only way to remove paid tax liens from your credit reports is if the record endures past its expiration date. If this is the situation you face, you are entitled to dispute the record with the reporting credit bureau.
Dispute Paid Tax Liens
Step 1
Obtain a copy of your credit report from Experian, Equifax or TransUnion, which are the main credit reporting organizations. Before you dispute a record of a paid tax lien in any of your credit reports, make sure that the record has indeed expired. If you paid the tax lien less than seven years from the date you intend to dispute it, your efforts will not result in the record being removed from your report.
Step 2
Contact the credit bureau directly if a record of a tax lien should have expired but is still listed in your credit history. The Federal Trade Commission advises filing your dispute in writing. Write a letter to the credit bureau, including your name and contact information. State that you believe that the record of a paid tax lien should have expired.
Step 3
Include copies of supporting documentation. The FTC urges you to put a copy of your credit report in with your correspondence with the expired record highlighted or circled. Also include copies (not originals) or documentation that offers proof that the tax lien was released, as well as the release date. If you don't have this information on hand, contact the taxing authority (such as the Internal Revenue Service) for duplicates.
Step 4
Mail your correspondence to the credit bureau certified mail, return receipt requested to ensure that your dispute is received and processed. The FTC advises making copies of all of the documentation you send to the credit bureau first so you can maintain these in your own records.
Step 5
Give the credit bureau time to investigate the dispute and get back with you in writing. Usually, this takes around 30 days. If a record of a paid tax lien has indeed expired and should be purged from your record, the credit bureau will remove it and send you a revised copy of your credit report.
Step 6
Live with the information that you cannot change in your credit report. Professional credit repair services may convince you they wield the power to get accurate negative information off of your credit report. But this isn't true, says the FTC. Most credit repair services are scams. The company takes your money, disputes accurate negative information, such as a timely record of your paid tax lien. The credit bureau refuses to remove the record, and you're stuck with the same credit report.
Tips and Warnings
- The most current mailing addresses for Experian, Equifax and TransUnion can be found in the Resources link below.
- The financial experts at Credit.com note that a lien for back taxes from the Internal Revenue Service may be particularly hard to avoid. Credit.com urges you to work with a certified tax professional so your credit report won't be tarnished. Unpaid tax liens remain on your TransUnion and Equifax credit report indefinitely; Experian, on the other hand, permits a record of an unpaid tax lien to expire after 15 years.
Things You'll Need
- Copy of your credit report
- Copies of supporting documentation
- Computer & printer
- Envelope
- Money to pay for certified mail service
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