Can you sue somebody for ruining your credit? Absolutely. If your credit has been damaged through no fault of your own, that is a very real harm to your reputation -- and your wallet. You have the right to pursue the claim in court. This is what you should know about credit scores and personal injury claims.

Who can you sue?

Who you can sue -- if you can sue -- depends largely on who you can identify as the culprit behind your damaged credit. You may have a good idea where the problem with your credit started or you may not have any idea at all, but the first thing to do is to acquire a credit report from all three of the major credit reporting agencies: Equifax, Experian, and Transunion.

While you have the right to ask for your report once a year for free, you have to pay for the actual score. Pay for it, because the score is a valuable part of your case -- it helps demonstrate the damage to your reputation as a responsible consumer who pays their debts.  

What is the next step?

Once you identify the source of your problems, take the normal steps to dispute the inaccuracy on your record with the credit reporting agencies. You have to go through this step even if you have already tried to dispute the issue with the company involved. Otherwise, your ability to sue is prohibited by the Fair Credit Reporting Act.

The reality is that credit reporting agencies often just affirm what they are being told by the company that is already misreporting something, so they often won't remove an erroneous report if the company making it still insists that it's valid. Even if the credit reporting agency does remove the report, you may still be able to proceed with your claim if you have any lasting damage.

How do you prove your damages?

Bad credit can damage your life in more ways than one. You can use a variety of online tools to estimate the cost of bad credit over your lifetime, but that's really only the tip of the problem, especially if trying to get a bad report off your record has caused you to miss an opportunity through denied credit.

For example, imagine that you went to buy a house and found out that you couldn't get the credit because your prior mortgage company reported, mistakenly, that you defaulted on your last home loan. It takes you six months to clear up the error and restore your good credit. In the meantime, not only have you lost the opportunity to buy the house you originally wanted, housing costs in the area you want to live have spiked by 5%. That means that the next house you go to buy is going to cost you significantly more over the years than it would have if you'd been able to buy six months ago. Adding to the costs, interests rates on loans have increased nationally by an average of 1%, which means the cost of the loan itself is going to be more. Plus, you have lost a lot of time and expended a lot of energy cleaning up your record. You've also suffered a certain amount of humiliation and embarrassment from being perceived as someone with poor credit. In order to really provide the court with an accurate assessment of your damages, it's often necessary to hire a credit consultant or researcher who can quantify your true losses.

Suing for damage to your credit isn't easy. It's also a relatively new type of lawsuit. One of the earliest cases goes back only to 2002 when a consumer successfully sued a large home improvement chain for repeated unauthorized credit inquiries that dramatically damaged his credit. Because of the complexity of the laws in this area and the need for expert witnesses, you shouldn't attempt to tackle the job without the assistance of an attorney (such as one from Whiting, Hagg, Hagg, Dorsey & Hagg​).