Late Taxes Can Affect Your Credit Score

Tax information isn’t generally reported to credit bureaus. But late taxes can affect your credit score which could result in a tax lien. In general, that’s the only way tax-related information goes on your credit report.

What a tax lien is and how it can affect your credit score:

Simply as, when you don’t pay your taxes, the IRS could file a notice of federal tax lien with the credit bureaus, the result could affect your credit score. If you owe more than $10,000, the IRS will automatically file the lien after taxes have gone unpaid for 30 days. If this happens, you could see a possible 100-point drop in your credit scores.

Paying Taxes with your credit card is not a good idea!

When paying your taxes with a credit card or personal loan, there’s the potential you could see some negative impact on your scores. Adding to your debt load can affect your credit scores as it raises your credit utilization, and if you end up struggling to repay the loan, poor payment history will have a similarly negative effect.

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