Saturday, January 30th, 2010

Will satisfying a tax lien raise my credit score?

tax credit score
Jen M asked:


I have been on a payment plan with the IRS for a tax lien, and need to settle the lien before I will be able to close on a mortgage. Once the lien is settled, will this raise my credit score, or only show that the lien has been released? Either way, I’m going to pay off the lien.

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4 Responses to “Will satisfying a tax lien raise my credit score?”

Lauren F Says:
February 2nd, 2010 at 2:42 am

In the short run, it will only show that the lien was released. It will take at least six months before your credit score starts to improve.

SPIFIMAN1 Says:
February 3rd, 2010 at 3:32 pm

It will only show as paid with a $0 balance paying collections or tax liens do not improve you credit score at all.

It looks a lot better to lenders that things like this are paid but as far as score goes it does not help.

Ed Atun Says:
February 4th, 2010 at 10:43 pm

No one knows the exact scoring method for the Fair Isaac Company (FICO) but i think that your score will go up by 50 points if you don’t have any new problems paying bills..

creditlogic Says:
February 6th, 2010 at 9:08 am

Being on a payment plan monthly for your tax lien means that every month you make a payment the DLA (Date of Last Activity) is reactivated. Because of this the credit score is punished more in that the newer the open negative the more the score is affected. With that said, paying or settling this lien will probably raise your score as soon as it is recorded on your credit report.

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