Can You Sue for a Damaged Credit Rating?
If it's good, your credit rating is an asset and can be more valuable than tangible things you own.
Your credit score number (ranging from 300 to 850) represents your reliability as a borrower. It is common for people to have an average score of 710 with a bad credit score considered any number below 670.
Suing Over Credit Score or Credit History Errors
Your credit score will impact your ability to obtain financing. So if someone damages your credit -- particularly when you're seeking financing of some kind -- they can cause you financial injury.
It can also cause higher interest rates, denied loans, loss of credit, and other financial problems for consumers. These types of "injuries" may be compensable after a lawsuit if the courts force the company to pay punitive damages.
Winning a Credit Score Lawsuit
Winning a damaged credit score claim is not easy. But it can be done, and people have won these cases against credit bureaus, lenders, credit reporting agencies, and other related companies. You have rights under the Fair Credit Reporting Act (FCRA) and protection under the Consumer Financial Protection Bureau.
Let's look at a sample case to get an idea of how you make this claim and what you have to show to win the case.
A Successful Credit Report Error Lawsuit
A California businessman, Alan Sporn, successfully sued Home Depot in 2002 for damage to his credit. The inaccurate information occurred after he was a victim of identity theft.
The thief tried to establish a line of credit at Home Depot. Sporn was in contact with the store and explained that he was not seeking credit, but the company ignored his warnings about the identity thief.
At the same time that was happening, Sporn was seeking financing for a property purchase. His good credit rating was tanking due to the constant inquiries by the thief. Due to the store's failure to act on what Sporn said, Home Depot ended up paying Sporn $1.3 million after a lawsuit for negligence.
But be warned: Sporn's case was rejected by a few attorneys before he found someone sufficiently creative to figure out what to claim and how to prove his case. The lawyer had to quantify the financial and emotional damage to Sporn, and that wasn't easy. Figuring out what a financial injury is worth often takes time and sound legal advice.
Credit Reputation and Negligence Explained
To win a damaged credit claim, you must show that the company or person you were dealing with:
- Owed you a legal "duty of care"
- Breached that duty of care
If the company (called the defendant in a lawsuit) breached that duty, it likely caused you harm. You could be awarded if you can prove what the harm is worth.
The tricky thing to figure out in damaged credit cases is quantifying the harm. It is one thing to argue that a credit rating is worth money. Most people will agree your credit reputation allows you to do essential things like buying a home, getting a car loan, opening a new credit card, getting student loans, etc. But it is another issue entirely to prove just how much your damaged credit reputation is worth in a particular set of circumstances.
For example, if Sporn was not seeking a mortgage while Home Depot ignored the fact that a thief was damaging his credit, he may not have won the case.
False Credit Information: Talk to a Lawyer First
If your credit rating was damaged due to someone else's action, consult with an attorney (or even a few).
As Sporn's case above shows, not all lawyers will see things the same way, nor are they all equally creative. But many attorneys consult for free or a minimal fee and will be happy to talk about your situation.
Related Resources:
- Find Personal Injury Lawyers in Your Area (FindLaw's Lawyer Directory)
- What's Your FICO Small Business Score? (FindLaw's Free Enterprise)
- Checking the Credit Information of Job Applicants (FindLaw's Learn About the Law)
- How to Get a Judgment Removed From Your Credit Report (FindLaw's Learn About the Law)