Liens and Credit
How to Remove a Lien from Your Credit Report
Liens and Credit....You may have a lien on your credit report for one of many reasons. If so, you probably already know that it can significantly affect your credit scores and your ability to obtain new credit. A lien can make it particularly difficult for you to not only buy a new home, but to sell your existing home.
Also, you should know that liens can be legally reported on your credit report for up to 7 years from the date of last activity. So if you wait 4 years to repay the lien, it can be reported on your credit report for another 7 years after repayment, totaling 11 years.
In some cases, after repaying the lien, the release of lien itself may be filed as a public record and can have a negative impact on your credit scores. So it's important to take the necessary steps to remove all lien information from your credit report. However, a lien can be very difficult to remove from your credit report.
Liens and Credit - What is a lien?
A lien is a claim against property as security for payment of an obligation. So basically, a lien acts as a type of collateral to ensure payment of an obligation. Until the obligation is repaid, the lien remains against your property. In most cases, you can't sell your property until the lien is released.
Liens can be filed against personal property or real estate. The most familiar liens are tax liens and judgments. These are usually filed with your local county recorder and reported as public records on your credit reports.
Liens and Credit - Know your rights and use them
The best way to remove a lien from your credit report is to contact the lien holder and negotiate a settlement to repay the lien. As a part of the settlement agreement you should request the lien holder's written approval to withdraw the lien from your local county recorder and your credit reports.
If your lien holder refuses to withdraw the lien, you should still repay the lien and obtain a release of lien documenting the repayment. Do not file the release of lien with your local county recorder!
Instead, after the lien has been repaid, immediately go to www.annualcreditreport.com to print a free copy of your credit reports. Because it takes some time for the release of lien to be reported to the credit bureaus, your reports may not yet reflect the release of lien. As a result, the credit bureaus are reporting inaccurate information.. .
Liens and Credit - Disputing Credit Errors
You have the right to dispute any inaccurate credit item reported by the credit bureaus. So immediately file a written dispute with the credit bureaus regarding the inaccurate lien reported. The credit bureau is obligated by the Fair Credit Reporting Act to do a re-investigation of your dispute with the lien holder.
Because your lien holder has already received payment of the lien they often have no incentive to respond to your dispute. Pursuant to the Fair Credit Reporting Act, if the credit bureau does not respond to your dispute within 30 days, the negative credit item has to be deleted from your credit report.
Liens and Credit - Third Party Dispute Verification
However, most of the credit bureaus use 3rd party sources to verify disputes of public records like tax liens. They usually only check the county records to verify the filing of the lien. Their process usually ignores the requirement to submit your dispute directly to your lien holder.
So make sure your dispute letter includes a copy of your release of lien and insist that the credit bureaus re-investigate your dispute directly with your actual lien holder. Make sure you provide your lien holder's contact information in your dispute letter.
In the event the credit bureaus respond to your dispute with a form "verification" letter, it will be apparent they simply "verified" your dispute thru a 3rd party source and did not perform a re-investigation directly with your lien holder as required by law.
You may then want you contact a local attorney and consider filing a small claims action for violation of the Fair Credit Reporting Act. Make sure you keep copies of the release of lien, the credit report showing the inaccurate lien information, your dispute letter, and the form "verification" letter from the credit bureaus as evidence.
Your attorney may consider sending the credit bureaus a letter of intent to file a suit in order to negotiate a settlement. The settlement agreement should include the credit bureau deletion of the lien information to settle their violation of the Fair Credit Reporting Act.
Remember, legal credit repair is about knowing your rights and requiring the credit bureaus, creditors and collection companies to comply with their legal obligations when reporting your credit information. So know your credit rights and legally improve your credit.
Get Credit Information and decide for yourself who to trust to help legally improve your credit.
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