In Evaluating and Understanding Credit Damage, credit damage expert witness Doug Minor writes:
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.
For example, is the score a FICO score, or a Vantage score? Is the report a business-to-business (B2B), or a business-to-consumer (B2C) product? Was it a residential mortgage credit report (RMCR), or a three repository merged credit report (TRMCR)? When was the report produced? All of these are typical questions that an evaluator will ask, and in most cases they are necessary.
Before deciding whether to extend credit to an individual, lenders typically purchase credit reports and scores that provide information from one or all three of the major credit bureaus (Equifax, Trans Union and Experian). These scores reflect the credit-related events in the life of an individual going back several years. Each of those events can ultimately be assigned a value, positive or negative, that contributes to the overall score. Some lenders may average these numbers to determine a person’s creditworthiness, or focus on just one score (or report) from a particular credit bureau. In the mortgage industry it is common practice to pick the middle of three scores, or the lower of two if only two are available.
The companies that compile this information can produce a variety of reports, depending on the needs of their clients. The reports they provide for credit issuers are typically more detailed than the ones that are accessible to the consumers themselves. So, an expert attempting to assess the credit impact of specific events should consult these more complete reports whenever possible. But an experienced credit damages expert can make valid judgments based on information found in many types of reports.
Among the next steps, it is important to establish the subject’s credit and economic status before the harmful event(s). Then it can be compared to the status afterward. This provides measurable data, which can be used to quantify harm. For example, a foreclosure or bankruptcy might cause an individual’s score to drop between 100 and 250 points. This can cause demonstrable financial harm in variety of ways-not to mention emotional stress. And the effects may last for many years. If another party-acting through malice or negligence-was the proximate cause of that harm, there is a good probability that the victim deserves to be compensated.
As the credit damages field gains exposure, attorneys will inevitably become more familiar with it, and more confident to factor it into their cases. Realizing that such damages can be accurately quantified is still a revelation to many practicing lawyers. But the most convincing proof is the growing record of successful credit damages cases. That suggests that this relatively new field will gain importance in years to come.
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.