Understanding Tax Lien On Credit Report

If you have received your credit report and it reports a tax lien foreclosure, then you are in trouble. The tax lien on credit report is a sign that you are in tax troubles. It is usually recorded on the credit report if you have failed to pay any due taxes. These taxes could be on your home, your car or any other property.

Usually the tax lien is seen on a credit report if you have failed to pay your mortgage or loan payment for 30 to 90 days. The tax lien leaves a very negative impact on the tax lien credit report. First of all your score decreases substantially.

This means that before the above mention period your credit report may mention a high credit score. However after you fail to make the payment on time the next credit report will show a lower credit score. Another problem that can happen is that your lender usually increases the interest rate if the credit score falls.

You also have to pay a penalty fee. This penalty fee can be very substantial. Depending on circumstances, it can be 18%, 24% or 36% of the due taxes.

One important thing is that your credit score before and after the tax lien, can not tell you the damage done. However it can give you an indication. So a tax lien credit report impact cannot be properly calculated. However according to an estimate a tax lien on credit report can cause a loss of about 100 to 140 points.

Usually people who get a tax lien on credit report believe that because of this foreclosure they can not buy a home again. Well, it is not true at all. There have been examples of people buying a new home after months of getting a tax lien on credit report.

However to buy a new home you will have to pay a higher interest rate. This can be avoided by making a substantial down payment. The down payment has to be around 15% to 20% of the purchase price. You can obtain this down payment easily from your friends or family members. After that it can be carried by you as the second lien on the property.

Another thing that you should know is that the credit score reduction due to the tax lien foreclosure is reduced with time. It continues until it reaches a minimal number after a few years.

For more information on tax lien on credit report you can read some books. One such book is - "Tax Lien$". It is a detailed document of the whole tax lien concept. Also it gives you some guidelines on dealing with the issue. The book is currently available for $16.49 online for purchase at a price of $16.49.

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