3 Things That Lower Your Credit Score and 3 That Don't
There are a lot of myths about what does and doesn't affect your credit score. It's true that failing to make payments on your debts or going through bankruptcy will make your credit score drop like a rock, but these aren't the only things that can damage your score in a big way. On the other hand, some things that you'd think would have a major negative impact on your score have no effect whatsoever.
If you fail to pay your taxes on time, the government may file a tax lien against you, which can sink your score. Thanks to the change in credit reporting guidelines made in July 2017, the three major credit bureaus have set higher standards for listing tax liens on credit reports (the lien must now include your name, address, and either your Social Security number or your date of birth to appear on your report). But if the tax lien does meet the more stringent reporting standards, it can have a huge impact on your credit, potentially dropping your score by as much as 100 points. And it's not just your federal income taxes that you need to worry about. If you fail to pay your state taxes or property taxes, your local revenue department might drop the tax lien hammer on you as well.
Paying off the lien will help, but it won't immediately raise your credit score. Paid liens will stay on your report for up to seven years; unpaid liens stick around for as long as 10 years. However, you can request a withdrawal of the lien, which would get it off your credit report and bounce your score back up. To request a withdrawal of a federal tax lien, fill out Form 12277 and send it in to the IRS.
Source: Fool.com
