What Damages are Available When a Consumer’s Credit is Inaccurate?
In the entire United States, safeguarding all of our credit, are only three companies: Equifax, Experian and TransUnion (all credit reporting agencies, or CRAs). Because of this 3-company monopoly, mistakes happen, and when they do, consumers have a right to sue under the Fair Credit Reporting Act (FCRA). What can a consumer recover as damages when something ends up on their credit that should not be there, or when something is inaccurate or incompletely reported to a consumer’s credit report?
The first and most obvious element of damages that a consumer can recover under the FCRA are actual damages. In many cases these can be significant. For example, assume that because of an error on a credit report, a consumer could only qualify for a loan that had a higher interest rate than what the consumer would have been able to qualify for had his or her report been accurate.
The difference between the cost of the loan with the higher interest rate (given to the consumer because of the error that lowered the credit score) against what the loan would have cost with the lower interest rate, would be the measure of damages. With higher dollar figures, such as mortgages or car loans, these damages can be significant.
In some cases, actual damages can be shown by loss of opportunity. For example, assume mortgage rates are very favorable. The consumer cannot qualify for these favorable rates because of an error on his or her credit, and doesn’t even try to apply. By the time the error is cleared up, the mortgage rates have gone up. The difference between the old mortgage rate and the new one would be the measure of damages.
Consumers can also get emotional damages that are caused by credit errors. A consumer does not have to treat with a doctor or be diagnosed with a mental illness to demonstrate emotional damages, although there must be some testimony documenting duress, stress, or hardship caused by the inaccurately reported credit.
Statutory Damages for Willful Violations
Sometimes, a CRA makes a mistake that is an accident—in other words, the CRA was negligent in making the error on the credit report. However, in some cases a consumer can show that the CRA willfully committed an error.
If the CRA’s error is willful–that is, the noncompliance was reckless, or the CRA acted in a way that it knew or should have known it was violating the FCRA—a consumer can obtain statutory damages (damages that are automatically awarded, even if a consumer does not have any actual, out-of-pocket damages) of between $100-$1000 per violation, in addition to being awarded attorney’s fees.
Problems with your credit or with something that is on your credit report that shouldn’t be there? Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.