The question of credit damages is one that expert witnesses struggle with on a daily
basis. And, the question about “does denial equal damage” is simply one of the
cornerstone issues that credit experts face when doing expert witness related work.
Does the denial of something as trivial as a credit card account mean you’ve sufferedcredit related damages?
I don’t think you can deny that being denied credit because of a legitimate negative
credit report item is not only NOT credit damage but it’s nothing for which we should
be sympathetic. However, if your credit reports and credit scores are being harmed
because of erroneous data furnishing then a denial of credit can and will be positioned
as economic damage.
Let’s walk through a few scenarios and explore the damages arguments. Consumer A
has poor credit scores and multiple valid derogatory items on their credit reports. He
also has one allegedly incorrect collection account. Consumer A applies for and is
denied a credit card account because of poor credit? Has he been damaged?
Consumer A has arguably not been damaged because he would have suffered the same
outcome of being denied a credit card even without the incorrect collection account. I’ve
said it before…you can’t ignore collections one through 15 and blame your woes on
collection number 16.
Consumer B has perfect credit except for one incorrect late payment that is causing
his credit score to be lower. He is denied a credit card account and the adverse action
letter refers to the collection account as a proximate cause for the denial. Has he been
damaged?
The knee jerk reaction is, “of course he’s been damaged.” But, what if he has many
other unused credit card accounts and really didn’t skip a beat as far as his spending
power goes? Was he really damaged, or was he just inconvenienced?
Finally, what if Consumer C applies for a mortgage loan and is denied because of an
incorrect late payment on her credit report? Was she damaged? Again, the knee jerk
reaction could be that she was, in fact, damaged. But what if the house she didn’t get is
now worth 25% less than it was when she originally applied? In that scenario you could
make the argument that she is in a better financial position because she’s not in a house
where she’s upside down.
Michael B. Citron is an internationally known public speaker and author. He lectures for professional associations worldwide. Michael is a serial entrepreneur who is dedicated to living the American dream, and helping others to do the same. His role at DisputeSuite.com has placed him in the spotlight of the credit repair industry. DisputeSuite is the largest provider of technology and education services to the industry, and has been a catalyst in the forward movement to standardize the credit repair industry.
