Homeowner associations (HOAs) can add value to your home by enforcing community standards so that your neighbor’s yard is well kept and not cluttered with weeds and his driveway is not littered with junkie cars. Often, HOAs also maintain amenities that make your property more attractive to buyers like community swimming pools, tennis courts, fitness centers, playgrounds, lakes, and even golf courses.
However, those services come at a price: your association dues.
Whether you made that payment on time—or at all—didn’t really affect your credit score in the past; that is now about to change. Beginning in October, credit data aggregator Sperlonga Data & Analytics will begin furnishing HOA payment and account status data to Equifax, one of the three major credit-reporting agencies.
If you pay your HOA association dues on time, that’s actually good news. Record of your timely payment could actually improve your credit score (at least your Equifax score). Of course, if you’re late, it could affect your score just as easily.
“Until now, HOA payments have gone largely unreported to the national credit-reporting agencies,” said Matt Martin, chairman and founder of Sperlonga, in a press release. “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.”
He added, “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.”
Sperlonga began working with homeowners and condominium associations in April 2011 when it created the first system that standardized their accounts. This system allows them to extract payment data every month from management companies’ accounting software and report the account data to Equifax. Sperlonga will begin testing their system this August with a full rollout planned in October.
So, why the push to track payment of your HOA dues? Paying your bills on time, including your association dues, shows financial responsibility, which is essentially what a credit score measures. Many industry experts would even like to expand the scope of collecting what is called alternative data by collecting information on rent payments and utility bills.
“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,” said Mike Gardner, senior vice president at Equifax, said in the press release.
With HOA payments now factoring into your credit score (and potentially other measurements in the future), it’s more important than ever to monitor your credit report on a yearly basis to make sure that it is accurate. An inaccurate credit report can impact your ability to not only make important purchases like a new car but also, of course, a new home.
Realtor | Founder
The Matheson Team – RE/MAX Fine Properties
21000 N. Pima Rd., #100, Scottsdale, AZ 85255
602-694-3200 or 888-656-4830