'Credit Invisible': Who are the 26 Million Americans Without a Credit History?

The U.S. Consumer Financial Protection Bureau (CFPB) reports that 26 million Americans are “credit invisible,” meaning that they don’t have a credit history on file with any of the consumer reporting agencies.
The CFPB also found that African-Americans, Hispanics, and consumers in low-income neighborhoods are more likely to have no credit history, or not enough current credit history to produce a credit score.

This means that one in 10 Americans have little to no credit, creating financial barriers to getting a credit card, earning an education, applying for a mortgage, buying a home or starting a small business.
The three consumer reporting agencies, or credit bureaus — Equifax, Experian and TransUnion — accumulate credit reports that track a consumer’s credit history. These profiles and the three-digit credit scores increasingly play a vital role in the lives of American consumers.
Most decisions to provide credit and set interest rates for loans are made based on information contained in credit reports. As a result, those consumers who have a limited or nonexistent credit history face greater hurdles in getting credit.
Consumers with limited credit histories can be placed into two groups. The first contains consumers without a credit report, or the “credit invisibles.” The second group, the “unscored,” includes 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, the CFPB says.
The CFPB’s report found that:

  • 26 million consumers are credit invisible because because they do not have any credit record. About 189 million Americans have credit records that can be scored.
  • 19 million consumers have unscored credit records: About 8 percent of the adult population has credit records that are considered unscorable based on a widely-used credit scoring model. Those records are almost evenly split between the 9.9 million that have an insufficient credit history and the 9.6 million that lack a recent credit history.
  • Consumers in low-income neighborhoods are more likely to be credit invisible or to have an unscored record: Of the consumers who live in low-income neighborhoods, almost 30 percent are credit invisible and an additional 15 percent have records that are unscored. These percentages are notably lower in higher-income neighborhoods. For example, in upper-income neighborhoods, only 4 percent of the population is credit invisible and another 5 percent are unscorable under the widely-used model.
  • Black and Hispanic consumers are considerably more likely to be credit invisible or have unscored credit records than White or Asian consumers. About 15 percent of Black and Hispanic consumers are credit invisibles compared to 9 percent of White consumers. An additional 13 percent of Black consumers and 12 percent of Hispanic consumers have unscorable records under the widely-used model compared to 7 percent of White consumers. CFPB analysis suggests that these differences across racial and ethnic groups materialize early in the adult lives of these consumers and persist thereafter.

The CFPB’s report is available here.

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