Lenders Can See Real Time Credit Balances

[MASTERNC]

We are scheduled to close on a house Thursday.  Back in July, we were informed by our mortgage broker that we needed to document payoffs (mostly small balances) on a few credit cards.  Given we use credit cards for everyday spending (PIF each month), we asked if this meant we couldn't use those cards at all for six weeks.  We were told that they would check credit about a week out, so we decided that if any card had a balance, we would pay off before the statement cut.

Fast forward to today, and the lender comes back to our broker saying they want real time confirmations our accounts have zero balances.  Supposedly, even though our statements had cut a few days ago, they were able to see we had used a couple of cards for moving expenses and to travel to a funeral.  Not only have we had to scramble to make same-day payments, the service they have to use charges a per-account verification fee plus a rush fee.

I've never heard of a credit reporting agency having real-time access to balances between reports by the lender.  This was never an issue when I bought my last house nine years ago, nor when I refinanced two years ago.  Just a warning to everyone else not to use any credit products they want paid off until the day after closing, even if the statement closes a few days before closing.

[MortgageMama]

Lenders will subscribe to un-disclosed debt notifications throughout the process. Those notices would include credit inquiries or new collection accounts. It should not be live monitoring of balances. Seems they are just following up with you on their original request to show a zero balance on those cards. I'm actually doing one right now where a borrower needs to pay off a card. After it's paid, all we need to do is order a credit supplement from the credit report provider and they verify zero balance.  The credit provider contacts the creditor directly to verify. There is no fee for that, so that part is curious. The only time I've ever seen per-tradeline fee is when we're doing a rapid re-score, and there is a charge for that service.

[MASTERNC]

It's actually real time balances because my broker sent a screenshot of the five accounts that hadn't yet cleared same day payments. The balances were post-statement because the statement balances were zero. They matched the current balance (new charges) for each account.

Think the service they were using was called Xactus. Maybe they did a rapid rescore for some reason but we weren't told they were going to do one as a condition of approval (just a soft pull a few days before closing). We had about a dozen small trade lines we paid off in July, so it isn't a cheap task for them to do this now.

[MortgageMama]

Hmmm. We use Xactus as well. Sounds like rapid rescore to me.

[MASTERNC]

We were never told there was going to be a rapid rescore that we didn't request, let alone one we would have to pay for. Is this normal?

[MortgageMama]

I wouldn't consider it a routine practice. It's really meant to boost a credit score by correcting errors, updating credit utilization %, updating collection status, etc. I can't speak to other lenders practices, but I will say the only time I use it is when the initial report has scores too low for a loan product and needs fixing. Simply because it's very pricey. 

[MASTERNC]

I'm just struggling to figure out how they got those balances like that then. I could have put $200 on a card the day after closing and the payment obligation when the statement clears post-closing would be the same as if I charged $200 the day before closing but in the same billing cycle.