A major credit reporting agency says it will soon take into account homeowner association fees. Home owners who are late on payments may soon see the effect on their credit score.
Sperlonga, a credit data aggregator, is the first company to provide HOA payment and account status data to Equifax, which is one of the three major credit-reporting agencies. A full rollout of the new HOA reporting to Equifax will go live in October.
Homeowner associations and property management companies collect about $70 billion in HOA payments yearly among at least 333,000 community associations, according to the Community Association Institute.
“Until now, HOA payments have gone largely unreported to the national credit-reporting agencies,” says Matt Martin, chairman and founder of Sperlonga. “Our service will help elevate association payments to the same level of importance as the consumer’s other financial obligations like residential mortgages, auto loans, and credit card payments. Property owners that pay HOA fees on time should begin to see the similar impact [on] their credit reports as they would with other payment obligations traditionally found in a credit report.”
For property owners who are late or delinquent on their HOA payments, they will likely see a negative effect on their credit score, just as if they had missed a mortgage payment.
“Introducing new sources of data beyond what has traditionally been found on credit files can provide additional insight into a consumer’s financial behavior and help deliver expanded credit access,” says Mike Gardner, senior vice president at Equifax.
The Tennessee Condominium Act of 2008 was put into effect on January 1, 2009 regarding HOA and COA lien laws. The act states that a COA/HOA is allowed to place a lien on one's property if they fall behind on monthly dues or any other fees. According to state law, the lien charges can include, but [...]