CFPB Says One in 10 US Adults Are ‘Credit Invisible’

As many as 26 million Americans, or one in 10 adults, are “credit invisible” and don’t show up across the three major agencies in the U.S. credit reporting system, the Consumer Financial Protection Bureau said Tuesday (May 5).

CFPB Director Richard Cordray said his agency’s research also shows an additional 19 million Americans adults have credit reports that are so out of date or limited in their scopes of information, that they are effectively unscorable. The study found blacks and Hispanics were more likely than whites to be without a credit score.

“Without credit reporting and credit scoring, it would be harder for financial service providers to assess and manage credit risk, and the supply of credit would be more expensive, more erratic, and more constrained,” Cordray emphasized.

Income levels serve as a major predictor of whether someone has a credit score or not. The CFPB said that nearly 30 percent of consumers in low-income neighborhoods were credit invisible and another 15 percent had credit records that could not be scored. Conversely, in upper-income neighborhoods, just 4 percent of consumers were credit invisible.

“When consumers do not have a credit report, or have too little information to have a credit score, the impact on their lives can be profound,” Cordray said during a call announcing the study. “And given that we found that consumers in low-income neighborhoods are more likely to be credit invisible or unscored, this may be limiting opportunities for some of the most economically vulnerable consumers.”