Tax Liens to Be Removed from Credit Reports

Posted on May 18, 2018

According to the Wall Street Journal, America’s three main credit-reporting firms plan to delete tax liens from American credit reports. Additionally, no new tax lien information will be added to existing reports starting this month. (The credit firms in question are TransUnion, Equifax, and Experian.)

This will result in the removal of more than 5.5. million credit report liens.

This is big news! Tax liens have had tremendous impacts on our clients. A tax lien can tend to have a chilling effect on a credit rating, and can affect a person’s ability to borrow money. It can also secure the government’s interest in a taxpayers’ assets.

This is especially true for the asset of real estate. Lenders often tend to avoid giving loan money to individuals with tax liens. A lien will also prevent a taxpayer from selling their real estate without first addressing their problems with the IRS. This is because purchasers (understandably) want to own property that is free of liens. A tax lien also prevents a taxpayer from borrowing against or refinancing their property.

The removal of tax lien information from credit reports is due to recent class-action lawsuits against credit agencies, over the handling of consumer information. In July 2017, the big three credit agencies began removing most civil judgement information from reports, and most lien info as well. This is the second time in history that these credit agencies have decided to remove public records from credit reports.

With this new removal of tax liens from credit reports, it may become for lenders to make decisions. Realistically, it will drive lenders to gather tax and lien information from other sources besides the big three agencies.

Our friend Jim Droske of Illinois Credit Services echoes this sentiment. Jim states that:

“Mortgage lenders are now acquiring judgment and tax lien data directly from LexisNexis. In the past, the credit bureaus got the public record data from LexisNexis and then the bureaus put those records on the credit reports. The liens and judgements still exist, of course, regardless of whether they are on the credit reports or not. Removing them just forces industries who need that data to obtain it from a different source. Most people with tax liens have other issues on their credit and the tax lien is not the only derogatory item. In those cases, the remaining derogatory items will continue to adversely impact people’s credit scores. Removing tax liens is not the silver bullet people think it will be.”

If you have an IRs problem, call us! We can help. If you have bad credit or negative information on your credit report, give Jim Droske of Illinois Credit Services a call at 844-700-SCORE.