Do you have a Lien on your property and are concerned it might show up on your Credit? In this post, find out if a Mechanics Lien can impact your credit and the best ways for improving it!
A Mechanic’s Lien is an effectual collection tool for those who have completed work on a construction project but have yet to be paid for their endeavors, services, materials, and/or labor. If you find yourself in this situation, you must file an intent to lien or preliminary notice inside a specific period mandated by your state.
After you have carried out this, you are going to be allowed to file your lien. If you put a lien on a property, that properties sale cannot go through until the issues with the lien are resolved as the title of the property is going to be darkened.
Does a Mechanics Lien Affect Credit?
As of 2018, Mechanics liens haven’t been included in the credit reports retained by the 3 primary credit agencies (TransUnion, Experian and Equifax). Presently, the only public records included on credit reports are bankruptcies. Therefore, the answer is No. A Mechanics Lien is not going to impact your credit. Nevertheless, as best business practices, it is suggested to resolve the lien claim so that the property doesn’t get foreclosed on.
What Can Impact Your Credit?
The following actions can affect your credit score in a bad way.
Failing to make payments – Credit scores are impacted by payment history and have missed or be late on payments can have a nasty effect. (Experian)
Using too much accessible credit – Credit exploitation is the second most important factor impacting your credit scores following payment history. It’s represented by your credit exploitation ratio, calculated by dividing the entire revolving credit you presently use by the entirety of all your revolving credit limits. A high ratio (above thirty percent) suggests to creditors that you overreach yourself financially. (Experian)
Applying for a lot of credit within a short period – Every time a lender needs your credit reports for lending decisions, your credit file registers a hard enquiry, which remains on your file for several years and can make your score decline for a short period. Lenders depend on the number of hard enquiries to establish how much new credit you are asking for. An excessive amount of enquiries within a short period can mean you are in detrimental financial health or are not acquiring new credit. (Equifax)
Defaulting on accounts – Foreclosures, repossessions, settled accounts, bankruptcies and charge-offs can appear in your credit report as adverse account information. All these can hurt your credit score in the future. (Equifax)
What Are the Best Ways for Improving Your Credit?
After you comprehend why your score is inadequate, strengthening your credit score could be easy. Time and labor may be required, in addition to growing reasonable habits that can increase your score in the future.
The following are the top 5 ways to strengthen your credit score.
The Best Ways to Improve Your Credit
- Be on time regarding paying bills – Payment history is a considerable aspect in establishing your credit score, so paying your bills when they’re due is going to boost your credit.
- Pay down debts – Get your credit card balances down, so your credit utilization ratio and improve your credit score.
- Fulfill overdue payments – Do not let payments go past their due date. Whether thirty, sixty, or ninety days late, overdue payment information affects your credit score adversely.
- Look for inaccurate information – Often times, the wrong information in your credit file could be the cause of a poor score. Do not disregard anything that is out of the ordinary; get it investigated as soon as you can and dispute it if found incorrect.
- Make less new credit requests – Lowering the number of times your petition for new credit is going to ensure less hard inquiries in your credit file. These inquiries remain for several years, and the difference to make to your scores lowers after a while.
So, now that you realize a Mechanics Lien is not going to reflect on your credit, it can have implications if you are wanting to sell your property. Being a property owner, you are required to remove the Mechanics Lien to have a clean title.
Dar Liens Offers Lien Processing and Filing in Arizona
Dar Liens Offers Processing and Filing of the following types of Liens: Pre-Liens, Notices to Owner, Medical Liens, Construction Liens, Mechanics Liens, HOA Liens, 20 Day Preliminary Lien Notices, and more.
