10% of Americans are “Credit Invisible”
Jann Swanson | Mortgage News Daily | May 6 2015 | link
About one in 10 American adults have no credit history according to a report from the Consumer Financial Protection Bureau, a total of 26 million persons who are “credit invisible.” These are persons who have no information on file with any of the nationwide consumer reporting agencies.
Credit histories contain data on a consumers bank loans, car loans, credit card bills, student loans, and mortgages; details about the terms of credit, totals owed, payment histories, and any liens or judgments that may have been incurred. This information is used by the agencies to produce three digit credit scores. Most decisions to grant credit and set interest rates for loans are made based on information contained in credit reports and on the resulting credit scores. As a result, those consumers who have a limited or nonexistent credit history face greater hurdles in getting credit.
CFPB says that in broad terms, those with limited credit histories can be classified as either consumers without a credit report, the “credit invisibles,” or as a second group, the “unscored.” These are consumers who do not have enough credit history to generate a credit score or who have credit reports that contain “stale” or not recently reported information. CFPB estimates that 19 million consumers have unscored credit records, about half of which are considered unable to be scored, a definition that differs across scoring models, and half that lack up-to-date information.
Fair Isaac Corporation which produces the widely used FICO credit score places the number of unscored Americans at 53 million, slightly higher than CFPB’s total of those either lacking any history or with histories that cannot be scored. CFPB says that about 189 million Americans have credit records sufficient for scoring.