Credit reporting affects many things today. Insurance quotes, employability, ability to buy things, get credit cards, and many other aspects of life are effected by credit scores.
So what about community association assessments, more commonly called ‘dues’. Homeowners association board members have been looking at alternatives to the old lien and foreclosure process for some time now. However HOA credit reporting has only recently become available. A few firms offer to credit report HOA assessments monthly, like a tradeline or credit card. So that means every homeowner must be reported every month – whether they’re delinquent or not.
Beware of Some Firms
It’s recently been discovered some of those agencies offering to credit report HOA dues monthly, are actually datamining homeowners. Homeowners are having their personal information sold to a company who is reselling their data to marketing and advertising firms, without the homeowner ever knowing it.
Credit reporting HOA dues is a viable option today. Though it must be done properly. First you need to understand that there are two primary ways to report an account to the three national credit bureaus. One way is the tradeline method, the other and more simple approach is to have unpaid dues reported as a collection account. That way you’re only affecting the credit scores of those whose attention you need to get.
Most associations would need a firm do the reporting on their behalf, as becoming a reporting entity may be too much of a hassle for its board. So most boards opt for working with a professional collection agency. However there are some important points to know before you go collection agency shopping.
Community associations may want to avoid contingency agencies. That’s because contingency agencies have some behind the scenes practices you may want to avoid. For example, most contingency collection agencies ‘score’ your accounts. That means they run yours accounts through software to determine which are most profitable to work on. Then they ignore the rest. Typically only a third (or less) of your accounts will ever get any collection attention.
In addition, contingency agency collectors get a very low hourly wage, with most of their income being dependent on bonuses. This puts stress and weight on these collectors which translates to high pressure on your members. Not good for community relations. Another of the many aspects giving contingency agencies a soiled reputation is that many credit report accounts right up front; never giving those people a chance to get current before damaging their credit report. Not only is this harsh, it makes little sense. A smarter course is to communicate credit reporting as a potential consequence to homeowners; an incentive to get them to pay their dues before reporting occurs.
The Right Way to Report Delinquent Dues
If you want the option of credit reporting your association’s delinquent HOA dues, look for a firm whose collectors are only paid on salary, that doesn’t use scoring software, and motivates members to get current before the consequence of credit reporting occurs.
Click here to learn more about a simple process for credit reporting HOA dues.