What is Credit Damage and What Can You Do About It?
Credit damage occurs when some third party, like a bank, other debt collector or a credit reporting agency causes negative information to appear on your credit report, most commonly provided by one of the three national credit bureaus, Transunion, Equifax and/or Experian.
When that happens, you can be financially damaged either by an increase in out-of-pocket expenses that result from your having a lower credit score, or by reduced credit capacity or expectancy. (I defined the three most common types of credit damage in my last article on the subject, which you can find HERE.)
Just to give you an inkling of what’s possible in this area, in one early use of an expert witness for credit damage, Bauer v. ERA Realty, a 1995 arbitration in Ontario, California, the consumer recovered $33,000 for damaged credit reputation… instead of the $6500 offered by the insurance carrier… by showing the differing cost between refinancing a $140,000 loan with her previous healthy rating and what the damaged credit rating would add to the cost of the loan over a seven-year period.
In addition, should a creditor’s conduct be judged as wanton, malicious, or oppressive, or if the creditor is deemed to have acted in reckless disregard of the applicable law, punitive damages may be awarded pursuant to 15 U.S.C. §1691e(b), regardless of proof of actual or out-of- pocket damages, and attorneys fees are also available when an award of actual or punitive damages is made.
(For you legal eagle types, here are the cites for the previous paragraph: Anderson v. United Finance Co.,666 F.2d 1274 (9th Cir. 1982); Shuman v. Standard Oil Co., 453 F. Supp. 1150 (N.D. Cal.1978) (dicta); see also, Sayers v. General Motors Acceptance Corp., 522 F. Supp. 835 (W.D. Mo.1981); Cherry v. Amoco Oil Co., 490 F. Supp. 1026 (N.D. Ga.1980). Attorneys’ fees are also available if an award of actual or punitive damages is made. 15 U.S.C. §1691e(d).)
It’s not a difficult concept to grasp, especially if you’ve been through it… when your credit score drops you can soon find that the interest rates on your credit cards jumps up significantly, or you may find that you’re denied when applying for credit that you need to run your business. No question about it… damage to your credit reputation causes real and measurable harm.
And that’s the point… credit damage is real damage that can be measured and in some cases recovered as part of legal settlements or ordered by courts.
Not that many years ago, credit damage was very difficult or even impossible to recover in court because judges and juries considered measurements of the damage to be too speculative. However, since the 1990s, that has changed dramatically. Today, there are many types of monetary damage that were once considered too hard-to-calculate, that are ordered by courts, such as damages for emotional distress and/or humiliation and injury to one’s financial reputation.
Today, there are reliable credit damage measurement (CDM) reports that are provided by credit damage “experts,” and often when testifying in court related to a wide range of causes of action, including…
- Breach of contract
- Breach of fiduciary duty
- Personal injury
- Credit report errors by lenders
- Wrongful foreclosure or termination, among others.
Georg Finder is one of those experts, in fact, he’s been a recognized credit damage expert for over 15 years, having provided expert testimony in dozens of cases where plaintiffs have been awarded monetary damages for having their credit reputations damaged.
Damage to credit is not a theory of liability — it’s a type of injury.
Georg explains that since the mid-1990s, there has been “growing recognition that credit damage may be sought in more than 14 distinct causes of action,” and that although the most frequent targets to-date have been the credit reporting bureaus and collection agencies, increasingly lenders who misreport payment histories or wrongfully foreclose, have also been defendants in such suits.
Well, that news certainly rang a few bells with me.
If you’re involved in litigation or considering initiating a lawsuit against your bank or mortgage servicer, I think it’s almost mandatory that you consider how to objectively measure damage to your credit reputation because if done properly it can increase the damages you receive as part of a settlement or jury award.
It’s no secret today that many people become victims of credit damage through no fault of their own.
I can’t even count the number of homeowners who have told me stories of how they lost or almost lost homes as a result of following instructions provided by their mortgage servicers, but other causes of action commonly seen and linked to credit damage include wrongful termination, identity theft, breach of contract, divorce and plain old misreporting of credit facts on one’s credit report.
Different states can address the issue of credit damage differently, but specific to California, Georg offers the following…
“Compensation for credit damage is authorized by California Civil Code Section 3333, “[f]or the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this Code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.”
Now, Georg also says that people who believe their situations involve significant credit damage, should consult a licensed and experienced attorney… it’s not the sort of thing that just anyone can expect to handle properly, even though some certainly do.
What you can do is schedule a 15 – 30 minute consultation with Georg or a member of his team. He offers a computerized scoring system than can tell you or your lawyer whether the degree of damage done to your credit is worth pursuing as part of litigation. Getting your credit damage score and some expert advice only costs a few hundred dollars and it’s very often, money well spent.
You can visit Georg online at www.creditdamageexpert.com.
Assuming your Credit Damage Score shows sufficient damage to your credit, Georg also offers comprehensive CDM reports that measure in detail the actual dollars reasonably expected from a loss of credit worthiness, such as from being required to make higher down-payments, pay higher interest rates and/or higher points and costs on loans over a seven-year period.
Again, according to Georg…
“The key points of CDM is to detail how it affects a client. For example, a client’s credit may be near-perfect before the negative information appears on the client’s credit report. By analyzing the pre-injury credit compared to post-injury credit, the CDM measures the cost of the same loans with the two different credit statuses.”
Georg is also available to present the outcome of his reports in court as your credit damage expert.
For lawyers, Georg offers a range of services to help them prevail in claims for credit damage. In fact, Georg is the only expert who also provides California State Bar sanctioned CLE class credits to attorneys related to understanding credit damage. (His most recent MCLE seminar “More Accurate Damage Demands,” is available at www.creditdamage.com, and you can look for one of his Webinars to be promoted here on Mandelman Matters in the future.)
The overriding point is that compensation for credit damage is something that’s arrived right on time, because I would have to guess that the last 6-7 years has seen more damage to credit reputations than at any time since the 1930s, and back then everything was different anyway. We’ve seen almost 10 million homes lost to foreclosure that should not have been lost, and countless cases involving breach of contract and promissory estoppel related to applying for loan modifications.
All of these and more might have benefitted from a credit damage expert like Georg Finder on the legal team, and now in a matter of 15 minutes or so, consumers can find out whether they can expect their specific damages to be recoverable by getting their Credit Damage Score.
If you want to know more, visit www.creditdamageexpert.com
Or you can email Georg at firstname.lastname@example.org
If you think it might matter to your situation, please don’t hesitate to contact Georg Finder for his assessment and advice. He’s very easy to talk to and rest assured, he’s seen it all (or darn close). I learn something almost every time I talk with Georg… and don’t worry… he’s not salesy at all.
About Georg Finder
Independent Credit Evaluator, Georg Finder is an expert on credit reporting violations and credit damage measurement. He has more than 15 years’ experience evaluating credit reports and appearing as an expert witness. He is the author of “Successful Credit Damage Measurement and Compensation” (Jan.2009).