What Happens If HOAs Can Affect Your Credit Score?

guest blog by Nila Ridings

At various times, I have heard the discussion of HOAs having the ability to report delinquencies in HOA dues to credit reporting agencies. The link below offers some excellent information about the importance of having excellent credit. It also brings to mind the additional risks of owning in an HOA.

For example: Numerous times in my growing up years, my dad told me to never co-sign a loan for somebody. He would not be proud to know I listened to him and never co-signed for a friend’s loan, but I did co-sign to pay the debts of 512 of my neighbors! That’s right. Buying in an HOA puts every homeowner in a position of being the guarantor on all debts, loans, lawsuits, settlements, construction defects, and disaster rebuilds. That makes co-signing for a car loan for your recent college-graduated kid brother seem like small potatoes, doesn’t it?

According to this article, a bad credit score can prevent you from getting a license to practice medicine, law, and other professions. Hypothetically, let’s say grandma gives you the gift of a down payment on a condo so you have a place to live while you go to medical school in Boston. And you leave your trash can out twelve hours too long because an emergency happens and you stay to help at the hospital. So, the HOA fines you $100 for the trash can violation. You refuse to pay it. They tack on another $2,000 for the attorney to send you a letter demanding the money for the fine. Next comes interest, more legal fees, and on and on. If this HOA had the power to report to the credit reporting agencies you could graduate from medical school, pass your boards, but still not be issued the license to practice medicine! All because of one day when you were trying to help save lives you didn’t make it home to put the trash can away by the deadline.

If I shared this scenario with a non-HOA resident they would most likely laugh and say that is insane!!! But for those of us who live in HOAs we know all too well this could very likely happen.

I think it makes yet another good point why HOAs should never have the ability to affect the homeowner’s credit. Not to mention so many of these HOAs have such poor financial record keeping.

For example, I talked to a neighbor a few days ago. He told me our HOA has gotten a judgement for back dues against him. He asked for a ledger so he could see what charges they have applied. They told him they do not have one, but would try to get it from the property manager. The property manager said they do not have one, but maybe the previous property manager has one. The only thing anybody seems to have is a total amount he owes. In the past, he has owned a business and finds this insane that nobody can give him a detailed ledger of the charges. I agree with him, it is insane. And he is at the mercy of them to pay what they demand because his house is being held hostage with a lien. What would happen if they could also destroy his credit rating?

Clearly, too much power would be in the hands of the totally incompetent. There’s no limit to the destruction they could cause to homeowners in HOAs!

America, please wake up! Please stop pretending that HOAs are some sort of fun-loving living paradise! Please stop building these horrible nightmares! And please prevent them from EVER having the authority to report to the credit bureaus!

(link to column about credit scores and how they can impact you)



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Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

2 thoughts on “What Happens If HOAs Can Affect Your Credit Score?

  1. Christine Bryant

    Is there a competent HOA board, anywhere? I doubt it. Those of us who bought into the idea of living in the oppressive environment of CID living have no one but ourselves to blame, I suppose. However, some of us have become enlightened over the past years. Last night our smug board and property manager, announced a $10k emergency special assessment per unit. This only happened after two concerned homeowners called the city and got a building inspector involved. Our building was on the the verge of red tag status. The two homeowners involved were harassed, slandered and subjected to other forms of unpleasantries by the board, particularly the leading board bully and her former PD detective husband. The most distressing part of the meeting was the demeanor of the majority of homeowners in attendance. They sat there like defenseless sheeples. One homeowner wanted to know the identity of the homeowners who called the city, bypassing the board, like it was a criminal act?!, instead of questioning the board who continually ignored the state of the deferred maintenance, in order to keep getting elected and re-elected. Something has to change, be it statewise or nationally. Most Owners don’t have the financial resources to say to heck with this, I’m moving out of this nightmare into a single family residence, without selling their unit first. I’m at my wits end with the HOA scam! Clueless homeowners/board members, mostly bully control freaks, with no oversight or little legal liability controlling other homeowners is a recipe for disaster and misery!

  2. Deborah Goonan

    At least half of HOA homes ARE single family detached residences. Although exterior maintenance provided by the HOA is not usually part of the deal, there are other significant financial risks involved for owners. Many HOA communities must maintain private roads, street lights, traffic signs, landscape of all common areas, private water and sewer systems, numerous lakes and storm water components including dams and canals, various recreational amenities, etc.

    Don’t believe for one minute that extensive common areas in amenity-rich and larger HOAs is less expensive to maintain than condominium structures. It costs MILLIONS to properly maintain these subdivision HOAs, and quite often reserves are insufficient.

    Even in small HOAs with very little common area to maintain, such as one or two retention ponds or one private road, the costs can be crippling when spread out over only a few households.

    Have you priced out resurfacing a road, repairing a dam, drilling a new water well, or dredging a retention pond lately? If you have a community where owners are used paying only a few hundred dollars per year into maintenance, and then, all of a sudden the infrastructure requires hundreds of thousands or millions of dollars worth of repairs, it can literally bankrupt an association.


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