You just received a consumer credit dispute. The clock starts now

By ICE Mortgage Technology
October 17, 2024 • 5 min read

Every American consumer has the right to a fair and accurate credit history, and under Fair Credit Reporting Act regulations, any credit dispute they file must have a reasonable investigation completed within 30 days. As a servicer, that means there is a ticking clock that starts the day you receive a credit dispute — not the day it arrives to the right spot in your department, but the day the dispute is submitted to you.

The problems with manual reporting

You have 30 days to complete your reasonable investigation and respond to the dispute (five business days if it’s deemed frivolous). The penalties for not fulfilling your obligations on time can be stern:

Your customer could see their trade line deleted, which could carry serious consequences for their credit, and your reputation
Your customer could sue you for not responding
If you rack up multiple non-responses as a data furnisher, you may face fines and further penalties

With such a limited window to investigate each dispute that comes in, servicers have no time to waste. Yet back-office operations are still hampered by inefficiencies and overly manual workflows that complicate the credit dispute process and put servicers at risk of missing their reporting obligations.

Collecting and compiling information

Delays in the dispute process can start on day one. As part of the reasonable investigation, servicers typically have to collect massive amounts of information. Servicers with overly manual processes have to gather that information from scattered, piecemeal sources. Without an automated, centralized platform, back-office employees at the beginning stages of a dispute will likely have to comb through multiple systems to compile information for their report.

Navigating different websites and pulling loan history (sometimes even off disk drives) is cumbersome enough, but at this point, there’s still more work to be done before the investigation can begin in earnest. Teams then need to compile that information manually which often involves tedious “stare and compare” data entry, costing servicing teams time and increasing the potential for human error which could delay the process even more.

Preserving the audit trail

Each step of the information-gathering process must be captured and preserved to show compliance in case of an audit. For servicing teams with manual-intensive processes, this could mean obtaining screen grabs of each piece of information, which then must be aggregated and stored in an accessible location.

If audits revisit a dispute years after it has been resolved, teams will need clear documentation. For teams that do not adequately preserve and document each step of the audit trail, compliance requirements can result in them having to essentially repeat entire past investigations — all while managing ongoing disputes.

Managing your back-office pipeline

When a servicing team is investigating multiple disputes simultaneously, it can become difficult to keep track of which team member is working on which loan. This can lead to employees doubling up on work they thought no one else was handling, or a dispute sitting unattended as employees’ schedules change.

When servicers use overly manual processes to manage their credit dispute pipeline, they run the risk of wasting resources and ultimately losing critical time to complete their reasonable investigation.

Automating the reasonable investigation

Thankfully, an automated solution now exists that streamlines the reasonable investigation process and helps servicing teams work more efficiently at a time when there is little room for error. ICE’s Credit Bureau Management solution can help servicers automate the time-sensitive processes that comprise a reasonable investigation.

During the information collection process, Credit Bureau Management can pull a customer’s loan information directly from the MSP® loan servicing system to compile a report to four major credit bureaus, helping expedite the reporting process by prefilling the many forms with either:

The last-reported information on a customer’s file
The current information on a customer's file, from the last time the servicing system batched

Credit Bureau Management also integrates with third party credit dispute history providers to seamlessly move information back and forth with no need to manually enter that same data again. The technology also helps servicers index their disputes, manage pipeline workflows, preserve a “one-click” audit trail to support compliance and avoid the need to “re-investigate” past disputes, and see at the loan level which back-office employee is working on which dispute.

By automating these manual processes, servicers can reclaim critical time to complete the investigation and communicate with their customers about the dispute.