Hobbsr: Can You Sue for a Damaged Credit Rating?

Friday, April 22, 2016

Can You Sue for a Damaged Credit Rating?

Your credit rating, if it’s good, is an asset and can be more valuable than tangible things you own. That number represents your reliability as a borrower and will impact your ability to obtain financing, so if someone damages your credit — particularly a time when you’re seeking financing of some kind — they cause you a kind of financial injury that may be compensable after a lawsuit.

Winning a damaged credit claim is not easy. But it can be done and people have won these cases. So let’s take a look at a sample case to get an idea of how you make this claim and what you have to show.

A Successful Example

A California businessman, Alan Sporn, successfully sued Home Depot in 2002 for damage to his credit, which occurred after an identity theft. The thief tried to establish a line of credit at the store, CreditCards.com reports. Although Sporn was in contact with the store and explained that he was not seeking credit, the company ignored his warnings about the identity thief.

At the same time that was happening, Sporn was seeking financing for a property purchase. His credit rating was tanking due to the constant inquiries by the thief, and the store’s failure to act on what Sporn said. Home Depot ended up paying Sporn $1.3 million after a lawsuit for negligence.

But be warned. Sporn’s case was rejected by a few attorneys before he found someone sufficiently creative to figure out what to claim and how to prove his case. The lawyer had to quantify the damage to Sporn and that wasn’t easy, figuring out what the financial injury was worth.

Negligence Explained

To win a damaged credit claim you must show that the company or person you were dealing with owed you a duty of care and breached that duty. If in breaching that duty, the defendant caused you a harm and you prove what it’s worth, you will be awarded.

The difficult thing to figure out in damaged credit cases is how to quantify the harm. It is one thing to argue that a credit rating is worth money and another to prove just how much it is worth in a particular set of circumstances. If Sporn was not seeking a mortgage while Home Depot was ignoring the fact that a thief was damaging his credit, he may not have recovered, for example.

Talk to a Lawyer

If your credit rating was damaged due to someone else’s action, consult with an attorney … or even a few. As Sporn’s case above shows, not all lawyers will see things the same way, nor are all equally creative. But many attorneys consult for free or a minimal fee and will be happy to talk about your situation.

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