Credit Invisibles and the Unscored
Office of Research Consumer Financial Protection Bureau
Download Document| Date Published | 2016 |
| Version | |
| Primary Author | Kenneth P. Brevoort, Philipp Grimm, and Michelle Kambara |
| Other Authors | |
| Theme | Loan Origination, Servicing Foreclosure and Forbearance |
| Country |
Abstract
Having a credit record and a credit score can be an important determinant of credit access. Yet, surprisingly little is known about people who lack credit records or scores. This paper provides the first documented analysis of the characteristics of consumers without credit records, called “credit invisibles,” and of consumers whose records are treated as “unscorable” by a widely used credit-scoring model. Our estimates suggest that 26 million adults, representing about 11 percent of the adult population, lack credit records. An additional 8.3 percent, or 19.6 million adults have credit records that are unscored. The incidence of having a credit record is not evenly distributed. Young, elderly, minority, and lower-income consumers are more likely to be credit invisible or have an unscored record. Additionally, our analysis finds that observable credit performance is not widely available for such consumers, which may hinder the ability of alternative data to expand credit access for these consumers.