Credit Score Impact

• It is difficult to specify how much an individual's credit score is impacted by a tax lien, because the credit scoring systems include all other positive and negative credit-related activity when calculating the credit score. If the only negative item on a person's credit history is a lien, his score may rise after the lien has been satisfied. On the other hand, if a credit history includes other negative items, such as late payments, bankruptcy or accounts in collection, removing the lien may not change the score much, because it may hold less weight relative to other negative items in the report. Additionally, each of the credit bureaus has its own scoring system, which may be affected differently.
  
  

Duration of Record

• Tax liens have a significant long-term effect on credit scores. They can remain on a credit report longer than all other negative items. An unpaid lien stays on a credit report for 15 years, and once a lien is paid, it remains for seven years. As a result, it is important to take care of liens as soon as possible.
  
  

Lien Search

• If you suspect a federal tax lien, a search may be performed to determine whether anything turns up. Several state websites offer this service free of charge. For example, the state of Illinois has such a search tool.
  
  

Removal

• Experian, one of the three major credit reporting bureaus, collects data on tax liens from the courts and also gets updates on lien status from the Internal Revenue Service. According to Experian, there is nothing an individual needs to do to get a lien release recorded. However, if a release is needed immediately, a copy of a lien release can be sent to the credit bureaus. Some state tax entities, such as the Franchise Tax Board in California, only notify the three major credit bureaus if it filed a lien in error. If the lien was valid, it is up to the individual to provide a lien release to the major credit bureaus. To verify the lien release has been applied, you should obtain a copy of the applicable credit report. The lien will not be removed from the credit report, but the report will show that payment has been made and the lien was released. A record of the paid lien remains on your credit report for seven years from the date it was paid.