A common task in my credit damage expert witness work is an evaluation of damages (or the lack thereof) purportedly caused by incorrect credit reporting. What I’ve learned in my 100+ cases as an expert witness is that there are several methods to calculating credit damages.
First off, there is no one recognized process or method for calculating credit related damages. Different expert witnesses do it different ways. Some experts won’t quantify damages at all. There is no “pounds per square inch” or “rotations per minute” standards when it comes to credit related damages. However, this does not mean that credit damages are impossible to quantify.
There are three fairly common methods of credit damage assessment. They are:
The Dollar for Dollar Method – This method involves an expert attempting to award a Plaintiff a dollar amount equal to a credit denial. So, if you’ve been denied a $100,000 mortgage the expert suggests that you’ve been damages by $100,000.
The Dollar for Dollar Plus Tax Liability Method – This method is the same as the first except it also includes a line item meant to cover a Plaintiff’s tax liability for the award.
The Multiplier Method – This method takes the dollar amount from the first method and then multiplies it by some percentage as a way to yield a lower and more defensible figure. Using the $100,000 mortgage example, you’d take 10 or 15% (or some other percentage) and assign that number as damage. The argument I’ve here is that the dollar amount cannot be interpreted as “free money” but it’s large enough to yield some benefit to the Plaintiff.
Public Record Method – This is much less common but it does pop up from time to time. When it comes to credit reporting damages, it doesn’t end with the credit report. For example, if a mortgage lender improperly forecloses upon a piece of property that is reported to the credit reporting agencies. We know that. But, it’s also a matter of public record at that point as well. And while credit reports can be corrected, you can’t make a foreclosure public record simply disappear. It’s conceivable that the public record could long outlast any credit reporting record of a foreclosure. As such, future lenders, employers and any other party with access to PACER could find the filing and hold it against you. I’ve seen this quantified a variety of ways including a flat amount or variable based on the other credit related 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 testified in both state and Federal courts.