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