What You Should Need to Know About Liens in Relation to Your Credit Score
A lien is defined as the legal right to sell somebody's property in the event that the borrower did not repay his debt.
The common collateral used are cars, houses, and lots.
Tax lien on the other hand is another form of lien imposed on landowners who fail to pay the tax for his properties.
To force him to pay his property, the title of the property is withheld by the bank until the taxes are paid by the land owner.
In both circumstances however, one thing is clear: that a person has a property and that it becomes collateral before the credit is paid.
Lien is a very important factor in determining your credit score.
Notice that people who have numerous tax liens among other things score poorer in the FICO model for determining creditworthiness.
It must be remembered that tax liens are bad for your financial health, so as much as possible people have to avoid them.
And the relationship between liens and credit scores finally become apparent.
Just like in crime scene investigations where forensics experts look for evidences to prove that a crime indeed occurred, a person's tax lien is also evidence that a person is indeed a delinquent payer.
And tangible evidences like liens are hard to disprove since documents detail your financial health black and white-unless of course, if it is not accurate.
Liens are not good.
They simply ruin the credit history of a person.
It taints your responsibility and accountability as a borrower.
It also clouds your ability to pay for the right taxes equal to the property you have.
Do your best to avoid tax liens.
Pay your tax liabilities on time.
Therefore, if you want to score high and become eligible for the house of your dreams or for the car you fantasize driving around the country, you have to begin with limiting the number of liens you have.
Remember that if you become careless on your credit score, you will end up with sub-prime lenders and all your house and car fantasies will soon go down the drain.
If you are not so rich and still depends on a credit card for most purchases until the next pay check arrives, the world of sub-prime lending is the last place you would want to enter.
Anyway, that is another topic.
Keep in mind that all other things and obligations met and paid, few or no lien record at all will be able to help you score higher the next time FICO scores are updated and re-evaluated.
The common collateral used are cars, houses, and lots.
Tax lien on the other hand is another form of lien imposed on landowners who fail to pay the tax for his properties.
To force him to pay his property, the title of the property is withheld by the bank until the taxes are paid by the land owner.
In both circumstances however, one thing is clear: that a person has a property and that it becomes collateral before the credit is paid.
Lien is a very important factor in determining your credit score.
Notice that people who have numerous tax liens among other things score poorer in the FICO model for determining creditworthiness.
It must be remembered that tax liens are bad for your financial health, so as much as possible people have to avoid them.
And the relationship between liens and credit scores finally become apparent.
Just like in crime scene investigations where forensics experts look for evidences to prove that a crime indeed occurred, a person's tax lien is also evidence that a person is indeed a delinquent payer.
And tangible evidences like liens are hard to disprove since documents detail your financial health black and white-unless of course, if it is not accurate.
Liens are not good.
They simply ruin the credit history of a person.
It taints your responsibility and accountability as a borrower.
It also clouds your ability to pay for the right taxes equal to the property you have.
Do your best to avoid tax liens.
Pay your tax liabilities on time.
Therefore, if you want to score high and become eligible for the house of your dreams or for the car you fantasize driving around the country, you have to begin with limiting the number of liens you have.
Remember that if you become careless on your credit score, you will end up with sub-prime lenders and all your house and car fantasies will soon go down the drain.
If you are not so rich and still depends on a credit card for most purchases until the next pay check arrives, the world of sub-prime lending is the last place you would want to enter.
Anyway, that is another topic.
Keep in mind that all other things and obligations met and paid, few or no lien record at all will be able to help you score higher the next time FICO scores are updated and re-evaluated.