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