Q:

Credit scores & defamation

Suppose you apply for a loan and are denied or are offered undesirable terms on the basis of a bad credit score as reported by one of the reporting bureaus. After reviewing your report you find nothing incorrect on it but nothing (in your opinion) to justify a low score. What recourse do you have? Might a lawsuit alleging defamation succeed, or are the CRBs protected from that somehow? Would the CRB have to reveal its scoring algorithm in open court? If  damages are small enough would they have to respond to a summons to small-claims court? What's the situation?
To be clear, I'm not talking about inaccurate information on the report, but a score based on accurate information which you feel unjustly defames you by misrepresenting your good credit. Also, assume the CRB refuses to change your score.

A:

If a statement is true, it cannot be defamatory.  In your hypothetical, the credit bureau calculates a score based on correct information. There is no false statement anywhere, so there can be no defamation.

Can you add some explanation of how giving someone a credit score lower than what his credit history merits is different from simply lying about that person's credit history? When I say "merits" I mean a score that would result in treatment by lenders that is significantly more consistent with what people with similar histories typically get.

I presume that credit bureaus use a deterministic algorithm to calculate credit scores, in which case it wouldn't be possible to "give someone a credit score lower than what his credit history merits."  More accurately, it wouldn't be possible to do that without bypassing the algorithm in some way.
You might be able to argue defamation if you could prove that the credit bureau did in fact bypass its algorithm when it assigned your credit rating.  You would probably have to show that your reputation was damaged because someone (i.e., a lender) knew that the ratings were deterministic and drew incorrect conclusions about you based on your incorrect score.
The problem here will be to show that the credit rating was erroneous given the credit bureau's algorithm.  To do that, you'd have to get your hands on the algorithm, which seems like it would be impossible to do, so you could do the calculation yourself.
Even if you can do that, a more likely strategy would be to pursue the credit bureau under the Fair Credit Reporting Act or some other consumer protection law.

