Tax liens are claims made on your property by a government entity for failure to pay your taxes. A lien doesn’t mean your property will be seized – it just means that the agency applying the lien has the first right to your property compared to other creditors.
A tax lien on your credit report can drop your credit score and raise red flags with potential creditors. Tax agencies don’t report unpaid tax bills to credit reporting agencies, but tax liens are public records – and until recently, they were part of the public records that could be scanned by credit reporting agencies and included on your credit report as negative items (along with bankruptcies and civil judgments).
Worse, tax liens can appear on your credit report for up to ten years after the lien has been fully paid and released – complete with an officially issued document verifying that the taxing agency no longer has a claim on your property.
In 2015, the Consumer Financial Protection Bur…