In Evaluating and Understanding Credit Damages, credit damage expert witness Doug Minor writes:
Credit damage is a somewhat new field of expertise, and many attorneys and consumers have not yet been exposed to its potential and importance. But this is changing, as more and more cases demonstrate that such damage can indeed be quantified. Credit damages can pertain in a variety of cases: divorce, wrongful foreclosure, personal injury, breach of contract, identity theft, fraud, and medical malpractice, to name a few.
Now more than ever before, award amounts include compensation for credit damage. And as my own experience has confirmed, the amounts can easily reach well into the six-figure range. Thus, the competence of the experts retained in such cases is important.
When a person’s credit profile has been harmed through the malicious or negligent actions of others, the question naturally arises: How have they been financially impacted? The economic damage from such events depends on several variables; each situation is unique. But it is now demonstrably true that this damage can usually be quantified within a range.
Evaluating credit damage-and understanding the causes-is a challenging task. It is even more challenging to assign an accurate dollar amount to a change in credit scores or a credit report.
Before trying to calculate damages, an expert must establish the times frames involved and the duration that the damages will exist. Typically, the process is as follows: After collecting all relevant information on the consumer’s credit file, the expert will then review it to identify the cause(s) of damages. Several key questions should be addressed: How and why did the damage happen? Who caused the damage? Is the information continuing to be reported to credit bureaus, or has it stopped? How is the information being reported?
Tools and methodologies do exist to accurately measure the effects of harmful credit events, both present and future. The approaches, methods, and terminology may vary from one expert to the next. For instance, a credit expert may refer to out-of pocket costs, loss or reduction of credit capacity, loss or reduction of credit expectancy, time lost (valued at a reasonable rate), increased credit costs (for mortgages, auto loans, credit cards, insurance premiums etc.), lost opportunity (e.g., job offers or ability to purchase/refinance a home), loss of enjoyment of life (hedonic damages), and loss of reputation.
Among the approaches experts use are the dollar-for-dollar method, dollar-for-dollar plus tax liability, the multiplier method and the public record method. Any of these may and can be used to describe the impact of credit damages.
One of the first steps is to examine the credit score itself. This seemingly straightforward action can become complex very quickly, as there are often numerous reports, with scores from multiple sources. So, a consumer will many times have a number of credit scores, each reflecting the data and scoring criteria of its source. Understanding the different features of each type of score and report is an important evaluation skill that an expert should have to accurately quantify credit damages.
Doug Minor is a credit damages expert and credit counselor. He serves as an expert witness and litigation consultant, with specialized expertise in the Fair Credit Reporting Act (FCRA) and Fair and Accurate Credit Transactions Act (FACTA). He is FCRA (Fair Credit Reporting Act) certified by the Consumer Data Industry Association (CDIA), which is the trade association of the credit reporting agencies. His company, Easy Credit Relief, Inc., provides a range of consumer services to help people understand and recover from credit problems. Please see Doug Minor.