One of the common requests in my credit expert witness related work is the assessment and quantification of damages caused by allegedly incorrect credit reporting and the subsequent lower credit scores that can be a result of the incorrect credit reporting. In my 100+ cases as an expert it has become apparent to me that there are a few realities when it comes to credit damages. They are:
1. There is no single generally recognized method for determining credit damages. Different experts do it different ways. In fact, some experts won’t put numbers to credit damages, likely because there are no damages or they’re not confident of their methods. There is no “miles per hour” or “feet per second” type standards to credit damages. This certainly does not mean that credit damage can’t be quantified.
2. The 3 most common methods I’ve seen are the dollar for dollar method, where the expert attempts to award a Plaintiff with a dollar amount equal to an amount of money not lent because of credit reporting issues. For example, if someone has been denied a $25,000 car loan, they’d consider that to be $25,000 of damages. The second is the dollar for dollar plus tax liability method. This is the same as the first method except the tax liability is included in the damage assessment. The final method takes a percentage of the dollar for dollar calculation. For example, if someone has been denied a $25,000 car loan due to credit report errors then the expert would take 10 or 15% of that amount and call it the damage amount.
3. Credit damages and economic damages are not the same thing. Simply having a lower credit score due to allegedly incorrect credit reporting isn’t a economic damage. There is no study or industry standard that assigns a dollar amount to a lower credit score, no “dollar per point” method. Economic damages would stem from cause, effect and subsequent effect. For example, incorrect credit reporting has the effect of a lower credit score and that lower score effectively caused some sort of economic damages.
John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and credit damages. He is a 20+ year veteran of the consumer credit industry including time with Equifax and FICO. He has been an expert witness in over 100+ credit related cases serving both Plaintiffs and Defendants. He is twice FCRA certified by the Consumer Data Industry Association. John has been qualified to testify at trial in both state and Federal courts.