The deadline for filing 2013 Federal Tax returns is April 15, only a few days away, and while some people have already made plans for how they will spend their tax refund, others have yet to file their return or are still making payments.
Most advice for improving or maintaining a good credit score tends to focus on credit cards, auto loans, and mortgages, but a tax lien can hurt a credit score significantly. The IRS will report non-payment of taxes to the credit bureaus, and tax liens are listed on credit reports under public records.
Tax liens can drop a credit score by 100 points or more depending upon the amount owed and the number of tax liens listed on the report. Someone who hasn’t paid their taxes in several years will have their payments owed listed separately for each year, and it reflects poorly on the consumer if they apply for a loan, a credit card, or another form of credit.
How can you avoid a tax lien? First, work out an installment plan with the IRS and file for an extension if need be. They will look over your finances and determine how much you can afford to pay. Second, stick to your payment plan. Do not miss a payment. If something changes in your financial situation and you think you will miss a payment, contact the IRS immediately. By missing a payment, you are violating the goodwill extended by the IRS in working out a payment plan, and you will have more worries than a damaged credit score.
Do you have poor credit or no credit? Obtaining an auto loan can be tough, but it is achievable. Contact a sales person at Bayside Chrysler Jeep Dodge and find a time to come in so we can work with you to find the proper loan. We’ll get you driving away in the new or pre-owned vehicle best suited for your lifestyle. Be sure to like us on Facebook, follow us on Twitter, and subscribe to us on YouTube to see our monthly specials.
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