Tax Liens, Judgments Removed from Credit Reports: Update

July 10th, Equifax, Experian, and TransUnion started removing judgments and tax liens from people’s credit reports if the item did not include their correct name, address, social security number and/or date of birth.

Disarmingly, lenders have the option to obtain this data from other information-providers such as LexisNexis (a research and information providing company). However, this does not give the lender the authority to add it back to your credit report; thus, your higher credit score remains. Since lenders base the interest rate and other terms on the almighty credit score, this is a WIN for you.

If a lender discovers a “hidden” tax lien or judgment, the lender has the option to deny your loan if they choose, because lenders have the right to protect themselves from a perceived financial risk.

The good news is that Fannie Mae has stated that they are not requiring lenders to obtain the data independently in order to approve a loan. Fannie is still studying the information and looking for feedback from lenders.

Meanwhile, the Fair Isaac Co. has released a study of millions of credit files to determine what affect this change will have on credit scores. So far, it looks like people’s credit scores are going up by 20 to 60 points!

Of course, it is impossible to predict what change will occur for you personally, because FICO scores are based on your entire credit report, not on just removing one item.

And remember, just because a tax lien is removed from your credit report, it doesn’t mean that you no longer owe the IRS money. Unpaid taxes can result in a wage garnishment or other legal action. Therefore, I recommend following the instructions in Chapter 19, Repair Your Credit Like the Pros, which is available here.

Many thanks to credit pro Chad Kusner, board member of the National Association of Credit Services Organizations — which advocates consumer protection and ethical business practices for the credit repair industry — and CEO of Credit Repair Resources for the updated information.

And a big thank you to all my readers for sharing this information via social media.

3 responses

  1. My lien from Experian remains on my credit report while it has been removed from Trans Union and Equifax. Should I take action?
    Also, I have seen no change in my credit score whatsoever. I do carry high balances on my credit cards but I have never had late payments. My credit history took a hit because the credit card company I started my history with went out of business about 8 years ago and didn’t sell my account to another company. So instead of it looking like I established credit 19 years ago, it now looks like it’s only been 13 because the account has chime off of my credit report (7 years). So I now feel like I’m establishing credit all over again. What should I do?

  2. Nikki, for a mortgage loan, you want to have at least two positive accounts showing on your credit report. If the account is over two years, that’s good; and if it is over five years, that is great! It sounds like you have plenty of credit history.

    You need to pay down your high balances to raise your credit score. Those high balances can be docking 50 or 60 points from your score. This is a far greater factor than showing 13 years’ history instead of 19 years’ history.

    If you have an IRS tax lien that you have not been paying on, the mortgage lender is likely to uncover that information even if it’s not on your credit report. I suggest you speak with your loan officer about how their underwriter will view it.

    I also suggest going to a full service mortgage lender, not a bank where they have no loan options other than their own bank loans. A full service mortgage lender can shop wholesale lenders for you in addition to using their own money.

    Best wishes to you and thank you for reading my blog,
    Carolyn

  3. Under the 2017 credit reporting laws tax lien was removed from Equifax & Experian, but not Transunion. I checked the actual recorded Fed tax lien and it only has my name, address and last numbers of my Social Security number.

    Please advise

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: