Consumer Comeback Blog

Credit Score Glossary: Lien

Lien: A legal document or “hold” used to create a security interest in another’s property.

A lien is often given as a security for the payment of a debt or, in other words, used as collateral. A lien can be placed against a consumer who fails to pay the city, county, state or federal government money that is owed. The property of the consumer serves as collateral during repayment of the debt.

There are several different types of liens. They are commonly used in situations of home mortgages and vehicle titles. Liens can keep borrowers from selling property or transferring the title of property until the money owed is repaid or the debt is satisfied.