The good news for anyone with a tax lien, is that it no longer will directly impact your credit score. Starting in 2018, the three major credit bureaus, Experian, TransUnion, and Equifax, decided not to include tax liens on credit reports. This means that having a tax lien put on your home by the IRS or state won’t automatically lower your credit score.

Related video: How Do I Get Rid of a Tax Lien?


The new standards also mean that resolving a tax lien won’t automatically raise your credit score. When the new guidelines went into effect, Experian’s estimates suggested that 11 percent of people saw a difference in their credit score, which was raised by as much as 30 points.


If you have an old tax lien (from before 2018), you should check your credit report to make sure it isn’t still on it. If your credit report does include a tax lien, call the credit bureaus to ask them to remove it. If you have difficulty with this, consult with an attorney who can make sure the right steps are taken to remove your tax lien from your credit report entirely.

Related article: What is the Equifax Tax Lien Settlement?

While resolving a tax lien won’t automatically improve your credit score, there are still ways that it can help you improve your credit. 

What Resolving a Tax Lien Does to Your Credit

The most important thing that resolving a tax lien does for your credit is open up opportunities for you to get funding through lenders and creditors. Even though the tax lien doesn’t show up on your credit report, it’s still part of your public record and can make it difficult or impossible for you to get financing until it’s resolved. 


When you resolve a tax lien, you also have freed up cash that you can use to pay down other debts. This is important for your credit report because the amount of overall debt you have compared to the amount of money you make is a significant factor in determining your credit score.


According to FICO, the five main factors that make up your credit score and the amount they impact it include the following:


  • Payment history (35%)
  • Amount of debt owed (30%)
  • Length of credit history (15%)
  • Credit mix (10%)
  • New credit (10%)


If you can pay down debt or open a new line of credit to increase your overall debt-to-income ratio, you may find that your credit score improves in a relatively short period of time.


There’s a chance that your credit score will drop when you resolve your tax liens, especially if you used other types of loans or debt to pay it off. This could be because your debt utilization ratio is too high or because lenders did a lot of hard credit pulls. After spending some time diligently making timely payments toward your debt, you should see an increase.


You don’t have to face a tax lien alone. We’re here to help you understand the best way to resolve your tax lien based on your situation. Contact us today to set up a consultation with a member of our tax law team.