Americans rely on credit for many purchases, but the option isn’t available to everyone. 25 million adults in the US are credit invisible. They lack credit history. Without credit history, they have no credit score and run into a harder time applying for loans and mortgages. Insurance premiums are also higher on individuals with little to no credit history.
Were credit scoring agencies to leverage alternative data, they could move 20 million more Americans into scorable credit bands. Many of them could even become prime or near prime borrowers. With consumer permission, the 3 sources of alternative data reporting agencies should consider are bank transactions, rental payments, and utility/telecom bills. Bank transaction data could reduce the unscorable population by 50%. Not considering rental payments currently puts renters at a disadvantage to homeowners in the credit market. 90% of American adults have at least 1 utility bill in their name. Learn more in the infographic below:
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