How to Get Compensation for Damaged Credit Rating

Last Updated:
April 7, 2023

Your credit score is a vitally important part of your financial health. A high credit score enables you to qualify for great loans, good credit card options with excellent interest rates, and better mortgage options. In contrast, a low credit score can limit your financial opportunities across the board.

So it's important to know what to do when your credit rating is damaged through no fault of your own. It's also important to know how you can get compensation for a damaged credit rating with the assistance of credit repair attorneys.

How Can Your Credit Rating Become Damaged?

Think of your credit score as an estimated average of your creditworthiness or financial responsibility. The credit bureaus come up with your credit score by taking information from credit furnishers – such as credit card companies, lenders, utility companies, and other businesses – and using it to determine:

  • How likely you are to pay bills on time
  • How responsible you are with loans
  • And so on

Your credit rating is supposed to be affected by your financial decisions. If you pay your bills on time and don’t take out excessive credit, you should have a healthy credit score. You can also damage your credit score by skipping bills or by taking out too many loans and credit cards.

But what if your credit rating is damaged through no fault of your own? Unfortunately, this can happen in a few major ways.

Inaccurate Credit Information

Firstly, your credit report might be affected by inaccurate or erroneous credit information.

For example, if you pay down a debt, like a car loan, but the lender fails to report that information to the credit bureaus, that negative line item can stick around in your credit report for weeks or months until you discover it. For that entire time, the open loan can drag down your credit score, causing significant damage in the process.

Other inaccurate or erroneous credit information can include:

  • Duplicate credit line items, like having the same debt or loan listed twice
  • Listing out-of-date or expired debts and loans as active or open
  • Listing debts that you never took out due to some other error

Identity Theft or Confusion

Your credit report and credit rating may also be affected by another type of inaccurate information: identity theft or identity confusion.

If you have a common name, the credit bureaus might confuse your information with that of another person. For instance, if your name is Mary A. Smith, and someone named Mary B. Smith takes out an exorbitant loan, one of the credit bureaus might accidentally put that loan on your credit report.

In this way, your credit report is weighed down by inaccurate information. Unfortunately, it can be difficult to prove your identity or dispute this information without filing a detailed credit dispute letter. All the while, your credit rating could sink lower and lower.

Too Many Hard Inquiries

Organizations are only supposed to make hard credit inquiries with your permission and for specific purposes. For example, when you apply for a mortgage, the mortgage lender will make a hard credit check to double-check your creditworthiness and see whether you are a trustworthy borrower.

Hard credit inquiries decrease your credit score by a few points. This is meant to discourage applying to too many loans in a short timeframe.

Unfortunately, if one or more organizations continue to make hard credit inquiries for your credit report, they can degrade your score over time. Companies are also not supposed to make a hard credit inquiry for your credit report at any time unless you give them express permission to do so.

When Can You Sue for Credit Score Damage?

Your first step whenever you encounter credit damage is to file a credit dispute letter with the relevant credit bureau or credit furnisher. Hopefully, this will resolve the issue and you’ll be able to restore your credit score to its rightful place in no time.

However, it may sometimes be necessary to sue the at-fault party for credit score damage. When your credit rating is egregiously damaged due to a preventable mistake or from violating your consumer rights under laws like the FCRA and FDCPA, you may have grounds for a lawsuit.

For example, if a debt collection agency continues to make hard credit inquiries against your credit report in order to get you to pay down the debt, it’s directly violating your consumer rights. You can sue them for damaging your credit score beyond what is reasonable.

Similarly, if you file a credit dispute letter with the credit bureaus to resolve inaccurate information, but the credit bureaus don’t fix the erroneous info, they’re directly responsible for your credit score continuing to take damage.

In these instances and more, a successful lawsuit may yield compensation or damages to pay you back for lost income or financial opportunities.

How to Acquire Compensation from a Credit Rating Lawsuit

Even if you have grounds for a lawsuit, there’s no guarantee that it will be successful or that you’ll get compensation. In order to maximize your chances of a successful credit rating lawsuit, you should follow two major steps.

Gather Key Information

First, gather all the key information you can about your case and credit report. The more information you have to provide to the courts, the better the likelihood is that the courts will side with you in any dispute or legal action.

Contact Credit Repair Attorneys

Second, contact knowledgeable credit repair attorneys right away. Credit repair attorneys are licensed, knowledgeable professionals who know the ins and outs of consumer protection laws and who know exactly what to do if you have grounds for a credit-related lawsuit.

Credit repair attorneys are so helpful that it’s recommended you contact them before considering any serious legal action.

How Do Credit Repair Attorneys Help You Get Compensation?

Experienced credit repair attorneys can help you acquire compensation for a damaged credit rating in a variety of ways:

  • Credit repair attorneys can gather evidence for you to strengthen your case. This can include gathering copies of your credit reports, copies of messages between you and the at-fault party, and other financial documents, like bills or debt collection letters
  • Good credit repair attorneys can also represent you in court. They know what to say and how to present evidence to maximize its effectiveness. In this way, your case will stand the best chance of yielding compensation or damages for your trouble
  • Credit repair attorneys can also negotiate with credit bureaus or other agencies on your behalf. In some cases, threats of litigation could yield settlements or other damages if a credit bureau or furnisher knows that it is in the wrong and that it will likely lose any lawsuit brought to court

On top of those benefits, credit repair lawyers can answer any questions you have about the process. You may not know whether a lawsuit is a wise choice given your current situation. When you contact credit repair lawyers, they’ll be able to give you sound legal counsel and recommend actions for you to take one way or the other.

Contact Fair Credit Today

Ultimately, credit repair attorneys like Fair Credit can provide invaluable assistance whenever you sue a credit furnisher, credit bureau, or other organization for credit damage. Your credit score is critical – if some other party damages it, they could be held liable for compensation to pay you back for lost financial opportunities. Contact Fair Credit today to learn more.

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