| Until recently lawyers for victims of credit | | | | reasoning is that they need to know that it |
| damage had little possibility to collect for | | | | is genuine. They have a tough time awarding |
| damages beyond medical treatment, lost wages | | | | damages based on sympathy. In order for them |
| and property loss. Insurance companies threw | | | | to confirm authenticity of a claim, they want |
| up their hands in sympathy, claiming victims | | | | to see its quantification. |
| can only be compensated for what can be | | | | |
| measured tangible goods and services. But, | | | | Measuring Loss of Creditworthiness |
| what happens when the victim has lost | | | | |
| considerable time from work, the family bank | | | | Assuring authenticity has been a sticky |
| is broke and monthly payments on mortgages, | | | | situation when it concerns measuring |
| car loans and credit cards payments are | | | | out-of-pocket loss for victims of credit |
| missed? Regardless of the haggling between | | | | damage until now. Attorneys who represent |
| lawyers and insurance companies, it's the | | | | victims of credit damage are now utilizing |
| credit victim who ends up having to live with | | | | the Credit Damage Measurement method to |
| a bad credit rating. | | | | recover out-of-pocket losses for their |
| | | | clients. CDM measures the actual |
| Today, there are legally accepted means for | | | | out-of-pocket dollars reasonably expected |
| measuring loss of credit through the | | | | from loss of creditworthiness, which includes |
| procedure of Credit Damage Measurement (CDM). | | | | higher down payments, higher points and costs |
| CDM is fast becoming a potent tool for | | | | on loans, higher interest rates, higher |
| recoverable credit damage awards when the | | | | monthly payments, or outright denial of |
| damage is not self-inflicted. Previously, | | | | credit, says Key. In addition, the CDM method |
| both judge and jury, and especially the | | | | also calculates the rates, costs and other |
| insurance companies, refused to acknowledge | | | | terms applicable to the resulting credit |
| CDM claiming it was speculative because they | | | | rating by lenders and projects the results |
| could not define it as tangible damage. | | | | over the relevant number of years for the |
| However, in case after case, victims of | | | | types of loans the client is likely to seek. |
| credit damage who use the CDM method are | | | | |
| getting compensation for credit loss. | | | | Key continues, For example, if a client's |
| | | | credit was near perfect before a triggering |
| Many factors are changing the old mindset | | | | event, and is subsequently damaged by the |
| including credit bureau technology | | | | event, the CDM procedure can illustrate |
| improvements, the application of the Fair | | | | before and after analyses, calculating the |
| Credit Reporting Act (FCRA), risk scoring | | | | cost of the same loans with the two different |
| sophistication, and the development of CDM as | | | | credit reports, Pre- injury credit compared |
| an objective, repeatable method that measures | | | | to Post-injury credit. In many cases, CDM |
| out-of-pocket damage reliably. | | | | clients have already realized significant |
| | | | compensation. In one such case CDM was |
| Credit Ratings and Recovery. | | | | instrumental in recovering $56,000 for |
| | | | damaged credit reputation. That calculation |
| The impact of a bad credit rating is much | | | | is the difference between what refinancing a |
| more significant than most people think. | | | | $140,000 loan would have cost my client with |
| Consider what poorly rated consumers face | | | | their prior rating, and what it will cost |
| when they want to lease or buy vehicles, | | | | them out-of-pocket with their damaged credit |
| obtain credit cards, buy or lease or | | | | rating measured over a seven-year period. |
| refinance their residence. In most cases, | | | | |
| it's an easy decision for the creditor: the | | | | Isolated Compensation vs. Repeatable |
| credit application is simply turned down or | | | | Compensation |
| the borrower is charged a much higher down | | | | |
| payment maybe thousands of dollars more with | | | | The CDM method of measuring intangible credit |
| monthly payments that are typically several | | | | loss is increasingly becoming the basis of |
| hundred dollars more. | | | | recovery for victims of credit damage. It's |
| | | | changing the way judges and juries measure |
| A person with bad credit is viewed with | | | | recoverable out-of-pocket loss, and then can |
| suspicion and is charged significantly more | | | | compensate for loss of credit expectancy. |
| for future extension of credit because the | | | | Certainly there are still some skeptics, |
| lender feels the need to protect against a | | | | mostly defendants. Technically, credit damage |
| greater risk or default, says Tom Key, a | | | | measurement is intangible. However, CDM has |
| civil litigator practicing in Tustin, CA. | | | | proven an objective and practical procedure |
| | | | to calculate out-of-pocket damage for |
| Over the years I have heard reports of | | | | companies or families to compensate for their |
| financial damages from clients who have been | | | | credit damage. |
| wrongfully terminated, defrauded, injured in | | | | |
| an accident or suffered losses from breach of | | | | To have this kind of measurement is an |
| contract, Key says. These victims were | | | | exciting complexity in our society, says Key. |
| especially distraught over the fact that | | | | CDM is very understandable and a rather |
| their prime credit reputation, carefully | | | | simple way to come to a conclusion of loss |
| nurtured for years, is destroyed overnight. | | | | for the victim. If you understand the math |
| It seemed to me that there must be a way to | | | | and are an expert at reading credit reports, |
| compensate victims for that type of loss. | | | | the calculations and recovery are undeniable. |
| | | | It's a method of turning isolated |
| Key has witnessed the reactions of many | | | | compensation into repeatable compensation. |
| jurors who failed to award a victim of credit | | | | It's changing the way jurors rule on these |
| damage their rightful compensation simply | | | | damaging cases. Because of this method, |
| because they could not quantify the damages. | | | | victims of credit damage can be more fairly |
| Jurors want a specific loss that they can | | | | and more completely compensated for |
| count, hold and see, says Key. Their | | | | out-of-pocket damage. |