Because your second question requires a shorter answer, let me answer it first. Updating or correcting inaccurate information in your credit history is something you can repair on your own. Write a letter detailing the inaccuracy to the reporting company. Send the letter and copies (not your originals!) of any documents supporting your claim to the credit-reporting agency. All three agencies allow you to do this through their Web sites. However, if you need to send hard copies it's better to use regular postal mail.
Credit agencies are required by law to investigate the item in question, usually within 30 days. They must forward all information to the reporting creditor and if they cannot verify the accuracy of their report or the creditor does not respond, the report will then be changed and updated to reflect the data provided.
The company must then notify you in writing of the change as well as provide you with an updated credit report.
It's important to note that if there is an inaccuracy on Experian (for example) there is likely a similar one on TransUnion and Equifax. Each company must be notified separately for each item.
Now let's talk about a tax lien's effect on a FICO score. While no one can tell you precisely how much your score will be impacted -- because 1) the Fair Isaac Company, the producer of FICO scores, doesn't release the algorithm it uses for scoring, and 2) the lien will be factored in with everything else contained in your credit report -- but a tax lien usually places a large drag on one's credit.
That said, your credit rating is calculated based on several variables, and knowing them may help find ways to off-set the negative impact of the lien.
The principle factors in credit scoring are:
1) Payment history, which counts for approximately 35% of your score, is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts, tax liens, and bankruptcy filings are also taken into consideration when analyzing your payment history.
2) Total debt and total available credit, which counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score. The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.
3) Length of positive credit history, which counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments. If you have accounts with long history (five or more years) and no missed payments, you should keep these open and paid off.
4) Mix of types of credit, which counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.
5) The number of new credit applications you have recently completed, which accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.
I hope this information helps you Find. Learn & Save.