Does a Tax Garnishment Affect Your Credit Score Even If It Is the Tax Department's Fault?

A tax garnishment affects your consumer credit scores whether it is accurate or inaccurate. Reported as a potentially negative item, a tax garnishment can cause your credit scores to drop drastically. However, it is almost impossible to say to what extent. State and federal governments can garnish wages or benefits checks.

Effects

Whenever a state or federal tax garnishment is recorded on your consumer credit report, your credit scores drop. Because no two credit histories are alike, there is no way to state equivocally how much improvement removing the garnishment will have on your consumer credit scores. One thing is certain, though: Having a tax garnishment recorded on your consumer credit report makes it difficult for you to obtain new lines of credit, and may increase interest rates for existing lines of credit.

Consumer Credit Reports

You must contact the three major credit bureaus -- TransUnion, Experian and Equifax -- directly to remove an erroneous tax garnishment from your credit reports. State tax boards do not determine the length of time public information is documented on a consumer credit report. Your complaint must be writing and contain supporting documentation, such as garnishment release.

Public Record

When a tax garnishment is created, the county recorder's office receives notice. It is important to remove a tax garnishment from public record as well as your credit reports. Contact your state tax board and ask an agent to send a notice to the applicable county recorder's office stating that the tax garnishment is incorrect. The county recorder's office will promptly update the public record.

Statute of Limitations

If the statute of limitations runs out, the garnishment releases automatically. By this time, you've suffered the damage to your credit score and have no further recourse. In the future, check your consumer credit reports annually. You are entitled to receive one free annual credit report from each of the three major credit bureaus through the AnnualCreditReport.com website (see Resources). You are not, however, entitled to receive your credit scores for free.