Sue a Creditor For Damaging Your Credit Rating
Can You Sue For Damaged Credit?
Last Updated: June 6, 2016
If someone else's actions damaged your credit, you may have a case, but only if the action was illegal, malicious, or infringed upon your rights, including a creditor's willing or negligent provision of inaccurate information to credit reporting bureaus.
Examples Where Your Credit May Have Been Wrongfully Damaged
You may be able to sue for credit damaged by:
- Erroneous reporting to credit bureaus of balances owed, late payments, etc.
- A creditor's improper handling of an identity theft issue.
- A divorce, wrongful dismissal at work, or personal injury that prevented you from being able to pay your bills, subsequently leading to late payments, missed payments, defaults and/or charge-offs.
When Should I Contact a Lawyer?
Before contacting a lawyer to file a lawsuit, it's important to go through the available channels for correcting the credit mistake outside of the legal system. If your dispute results in a negative listing being removed from your credit report, problem solved; no lawsuit necessary. However, if your dispute is dismissed, it proves you tried to resolve the issue on your own, leaving you no choice but to pursue legal counsel. That's when it's time to contact a consumer lawyer, explain your situation, and see if you have a case.
How Do I Dispute Erroneous Information on My Credit Report?
It's important to try and resolve the matter through the appropriate channels before contacting a lawyer and filing a lawsuit. This means writing letters of dispute to the bank or company that allegedly caused the credit damage, as well as the credit reporting bureaus. Be sure to send these letters via regular mail, certified. This way, there can be no question as to whether your letters are received. Also, it establishes a date of receipt from which they have 30 days to respond to your dispute.
My Attorney Says I Don't Have a Case, Should I Just Drop It?
No, there are cases in which one or more lawyers turn down a case only to have another lawyer see the possibilities, take the case to court, and successfully win a settlement.
How Is The Monetary Award of a Lawsuit For Damaged Credit Determined?
Credit researchers can review your case and credit history to determine just how much your damaged credit has cost you.
What Sort of Damages Are Covered in a Credit Lawsuit?
While every case is unique, damages that may be covered in a credit lawsuit include:
- Increased out-of-pocket expenses, such as payments on high interest loans for which damaged credit did not qualify you for lower interest rates.
- Loss of credit capacity, such as credit limits lowered.
- Loss of credit expectancy, i.e., no longer applying for credit as you did previously, as you know you will simply be turned down.
- Aggravation, loss of time, and/or loss of credit reputation.
Can I Sue For Damaged Credit if it Was Already Bad to Begin With?
While you are well within your rights to sue under these circumstances, it's a harder case to prove and win. As a result, you may have a tough time finding a lawyer to take on the case. That said, you never know, so it may be worth seeking counsel to exhaust all possibilities.
Are There Any Circumstances Under Which I Can Sue For The Reporting of Accurate Information That Damages My Credit?
No, your creditors are well within their rights to report negative information to the credit bureaus provided it is accurate. This includes late payments, defaults, and charge-offs.