Watch out! HOA fees can now affect your credit score.
Homeowner’s associations (HOAs) offer community features and maintain community standards, usually for a fee. According to the Community Associations Institute, homeowner’s associations and property management companies collect about $70 billion in HOA payments yearly.
Until now, HOA payments have gone largely unreported to national credit-reporting agencies, which is good news if you’ve been habitually delinquent on your dues. However, beginning in October, Equifax will roll out a new program which includes HOA data.
Sperlonga, a credit data aggregator, is the first company to provide HOA payment and account status data to Equifax. This service will help elevate association payments to the same level of importance as other financial obligations like mortgage loans, auto loans, and credit card payments.
These effects can be either positive or negative. If you pay your HOA fees on time, that may help improve your credit score. If you are late or delinquent on your HOA payments, you will likely see a negative effect on your score.
Thank you for this heads-up. I had no idea that HOAs were (or will be) reporting to credit agencies.
This is yet another reason my wife and I will never live in an HOA-governed community. We currently own our home (outright) in a somewhat remote rural area, which is governed by a CSD (Community Service District) — but does not collect dues of any kind, and provides only the most basic services, such as road clean-up. (We are billed annually by the county for fire services.)
That’s fine with us; we may be lacking a few niceties in our spread-out neighborhood, but far more important to us is the right to be left alone and “do our own thing.”
When first shopping for our home, we told our real estate agent that an HOA was a deal-breaker. My wife and I had both lived in HOA communities before, and both vowed to never again deal with the tiny-minded politics of another.
That decision cut our options considerably, but it was worth sticking to our guns. There is, for example, a breathtakingly beautiful area of large homes, on large lots/parcels, which anyone with a desire for peace and seclusion, yet with all the creature comforts, would die for. However, the CC&Rs of the HOA are restrictive to the point of mandating the color of the tarpaulin (brown only) spread across one’s woodpile. (As you can guess, the only approved paint colors for one’s home are limited to a few shades of brown. It would have been like living in the movie “Pleasantville.”)
And now we learn that HOAs are going to report the timely payment of HOA dues? What about fines for, say, various infractions of the CC&Rs — which may be incurred on the whim of an HOA board member who just plain doesn’t like you?
Thank you for giving us yet another reason to avoid HOAs completely.