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Remove Liens from Your Credit Report Fast
A number of things can cause a lien on your credit report, but all of them can damage your credit score and make it difficult for you to get credit in the future. If you find a lien on your credit report or you receive a notice of lien in the mail, take steps immediately to remove the lien from your credit report. If the lien is valid and unpaid, you'll find it difficult or impossible to buy or sell a home or get new credit. Even a paid lien remains on your credit report for up to 7 years from the date of last activity, so if you wait 4 years to pay your lien, that lien will follow you around for 11 years. That's a long time for anyone to have to deal with a negative credit item. Even if you don't think you'll need to apply for credit or buy or sell a home in the near future - take the steps to remove the lien from your credit report.
What is a lien?
A lien is a legal claim against property as security for payment of an obligation. A lien could be against personal property or real estate, depending on your circumstances. Sometimes a lien results from a judgment against you. For example, if you hire someone to perform home improvements and then fail to pay the contractor, that contractor can take you to court for non-payment. If the judge finds in favour of the contractor, he could win a judgment against you. If you fail to pay the judgment, the contractor could pursue a lien against your house. If this type of lien occurs, you must pay off the contractor and satisfy the lien before you can sell your home. Most banks won't process home sales unless the home has clear title, and this type of lien prevents you from transferring the title to another party.
The other common lien is the tax lien. Millions of people get into tax debt every year, and then find themselves overwhelmed by tax penalties and interest within a very short time. Ignoring tax debt with the IRS won't make it go away. In fact, ignoring tax debt can cause it to compound to the point that you'll never be able to pay it all, so it's best to contact the IRS quickly when tax debt occurs to put a payment plan into place and avoid the penalties and interest that accrue when you owe the IRS money. A tax lien functions very much the same way as any other type of lien; the IRS sends you a notice of lien in the mail and may lien your property or other assets, so you must pay the lien in order to regain title to said property. If an IRS tax lien is filed against your home, you cannot sell the property or refinance until you have satisfied the lien.
How to remove a lien from your credit report.
The most effective way to remove a lien from your credit report is to contact the lien holder and make arrangements to repay your lien. If you no longer owe money on your lien, the status is changed to "paid lien" or "satisfied lien" on your credit report. While this is preferable to an unpaid lien, and a paid lien will once again grant you title to your property so that you can dispose of it in whatever manner you'd like, a paid or satisfied lien on your credit report can still affect your credit score. A paid lien may remain on your credit report up to 7 years from the date of last activity. If it takes you four years to pay a lien, then the lien holder may update your date of last activity and that lien may be on your credit report for up to 11 years. When you contact a lien holder to pay a lien, try to negotiate the removal of the lien from your credit report. Sometimes a lien holder is willing to remove a lien in return for payment. If they get their money, there is no reason to pursue the lien.
Is it possible to dispute a lien on a credit report?
It's possible to dispute anything on a credit report. However, it's difficult to successfully dispute a lien - especially if the lien is outstanding. If the lien has been settled or paid, it may be possible to have it removed via dispute. If the lien holder does not respond within 30 days to verify the lien, the credit bureau will remove it from your credit report in most cases. Some lien holders don't bother to respond to paid lien disputes because the money has already been paid, so it's not worth the effort to continue to maintain the lien.
Want to learn how to effectively dispute liens on your credit report? Check out the Credit Secrets Bible.