Credit reports are not always perfect. In fact a certain percent of credit reports contain significant mistakes. In theory, everyone is entitled to one free copy of their credit reports each year from each of the major credit reporting agencies. But in reality very few people take advantage of the opportunity to get their free reports. The result is that most people with error-filled credit reports don’t discover the errors until they are in a difficult situation – such as at the last minute when they apply for a mortgage or major loan.

Sometimes these incorrect credit reports cause damage to the victim. A mortgage is turned down unnecessarily or the interest rate on a credit card is raised because the bank got bad information.

In the past victims of credit damage had only a minimal chance of collecting damages through the usual legal steps. If there was a loss of money due to medical treatment, lost time at work or actual property loss these payments could be recovered. But there was no way of collecting less easily quantified things, such as damage to the victim’s reputation due to penalties on loans and credit cards. Insurance companies might express sympathy, but would not do more.

The victim of unfairly damaged credit suffered the penalties alone.

Recently a new system has been developed to greatly increase the chances of recovery for a vitim of damaged credit. Called the Credit Damage Measurement (CDM), this new system is a powerful tool to bring justice into this area of dispute. Fair recovery chances are greatly improved because of credit bureau technology improvements, the use of the Fair Credit Reporting Act (FCRA), more sophisticated risk scoring and improvements in CDMs objective, reliable method of measuring out-of-pocket damage.

Recovery Due to False Credit Ratings

Having a bad credit rating has a more negative impact than most people appreciate. Imagine the problems someone might have with a messed up record if they are also trying to lease or buy a vehicle, obtain a credit card, buy or refinance their residence. All to many times the bank or ending institution simply turns the poor applicant down or charges a higher, penalty rate. The bank justifies their behavior by claiming they have to protect themselves against a bad risk – even if the reality is there is no bad risk.

A victim might not have expected such bad treatment, As far as the victim is concerned they might have carefully built a good credit record over many years, and this strenuous effort is destroyed in a n unanticipated flash.

Sometimes victims of false reports went to court to try to recover damages, but sympathetic jurors didn’t come through for them because measuring exact damage was considered impossible. Awarding damage based solely on sympathy points was not considered proper.

Lawyers, insurance companies and judges are now using Credit Damage Measurement method to recover out-of-pocket losses for the victims.

CDM measures actual out-of-pocket costs reasonably expected from loss of creditworthiness, which includes higher points, higher down payments, higher costs for loans, higher interest rates, higher monthly payments or outright denial of credit. In addition, the CDM method also calculates damages over the relevant number of years for the types of loans and similar financial products the victim would normally get.

The CDM method is becoming the standard for the way judges, juries and insurers measure recoverable out-of-pocket loss, and then can compensate for loss of expected credit. CDM has taken an issue which is somewhat subjective and made it as objective as practical. There is room for differences of opinion, so some people are skeptical. But CDM has proven to be practical enough to survive most tests.

Because of this method, victims of credit damage can expect fairer treatment and a realistic chance of compensation beyond the minimal out of pocket costs.

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Tags: Credit Damage Measurement, credit reporting agencies, credit reports, damaged credit, error-filled credit reports, free reports