Through December 31, 2023, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.
Tax liens, or outstanding debt you owe to the IRS, no longer appear on your credit reports—and that means they can't impact your credit scores.
Tax Liens Removed From Credit Reports
Tax liens used to appear on your credit reports maintained by the three national credit bureaus (Experian, TransUnion and Equifax). Even if you paid the lien, it stayed on your reports for up to seven years, while unpaid liens remained on your reports for up to 10 years.
In 2017, however, all three credit bureaus implemented changes to eliminate civil judgment records (notes that a consumer owes debt to a court because of a lawsuit result) and half of all tax lien data. By April 2018, all tax liens were removed from credit reports by the bureaus.
The updated rules are the result of a Consumer Financial Protection Bureau study that found issues with reporting such information correctly.
"A lot of judgments and liens were linked to the wrong people, so someone may share your first and last name, maybe live in a different part of the country, and they might have a lien or judgment that might get linked to your file," said Ankush Tewari, senior director of credit risk assessment at data firm LexisNexis Risk Solutions, in American Banker.
How Will the Tax Lien Change Affect My Credit?
According to LexisNexis Risk Solutions, only about 11% of consumers will see a change to their credit reports as a result of this action, and scores could increase by as much as 30 points overall.
However, the Consumer Data Industry Association, which represents the three credit bureaus, said in a statement in 2017 that "analyses conducted by the credit reporting agencies and credit score developers FICO and VantageScore show only modest credit scoring impacts."
How Can I Check My Credit Reports?
Whether your report is affected or not, be sure to check your credit reports from all three bureaus to ensure the information they contain is accurate.
You can obtain your credit reports from many sources. Experian offers a free credit report, as well as your FICO® Score☉ . You can also get one free credit report every 12 months from each credit bureau at AnnualCreditReport.com.