Somewhere around 25 percent of homeowners pay homeowner association fees for a variety of services that range from common area maintenance to security patrols. However, something different from what a few landlords report as rental delinquencies to the credit unions, HOAs traditionally have not reported delinquent HOA fees to credit unions.
Unpaid HOA fees not being reported to credit bureaus is most likely to soon begin changing. Credit data aggregator Sperlonga has decide to begin collecting this data and reporting it to Equifax. One of the three major credit-reporting agencies. This will almost certainly make a difference in the credit ratings of hundreds of thousands if not millions of homeowners.
Homeowner Credit Ratings
Sperlonga will begin testing the credit reporting in August with a plan to fully roll it out in October. The U.S. has approximately 333,000 community associations that could elect to engage in this service. Most likely, it will take years for most HOAs to join the service but it appears the general public is going to be held to another level of financial accountability
Maybe that’s a good thing and maybe not. These are people that have already qualified for a home mortgage. However, negative points for delinquent HOA payments could make it impossible for these people to move up the homeownership ladder (unable to qualify for a larger mortgage).
On the other hand, those in the finance business think this is a positive for those that make on time payments because it can also improve credit scores for those that stay current. Unfortunately, those in the financial business are solely interested in protecting the wallets of the already rich senior financial officers. They have no interest in helping the struggling common consumer which is what most homeowners are.
What Homeowners Need to Know About Credit Ratings
What consumers need to be aware of is that all three of the major credit rating companies are required to provide all credit rating information for free. This is very important to most consumers because seldom is the credit information accurate. For example, negative credit issues are often quickly reported but when it’s brought back current, that information is mostly not reported to the credit agencies.
Any consumer can challenge any negative credit report. Or at least see what is being reported to the credit agencies. What often happens is the negative is reported but even when the delinquency is cleared up that information isn’t reported. What every consumer is legally entitled to is challenging every negative report on his or her credit report. The negative report is taken off the consumers report until the reporting business is able to fully document the negative report.
Often, the reporting business is not able to provide adequate or accurate documentation. In those cases, the negative is removed from the consumers’ report and the credit score of that person goes up. Anyone that will be seeking new credit should take the time to challenge credit errors. Now, that will include delinquent HOA fees that are eventually brought current. It could easily make the difference between moving up to a bigger and better house or not being able to.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.