Earlier this month, the CFPB issued its research report on the demographics of the population who either do not have a credit record (tagged by the CFPB as being “credit invisible”) or who have insufficient credit histories to generate a credit score (tagged by the CFPG as being “unscorable”).   The Report documents the results of a research project undertaken by the CFPB’s Office of Research “to better understand how many consumers are either credit invisible or have unscored credit reports and what the demographic characteristics of such consumers are.” Data Point: Credit Invisibles, p. 5.

The Findings:

  • According to the Report, 26 million consumers (11% of the adult population) in the United States were credit invisible, while an additional 19 million US consumers (8.3% of the adult population) had credit records that were unscorable. 
  • The Report also found that there is a strong relationship between income and having a credit record: Almost 30% of consumers in low-income neighborhoods are credit invisible and about 16% have unscored records. This compares to only 4% of consumers in upper-income neighborhoods who are credit invisible and 5% who have unscored records.
  • Additionally, Blacks and Hispanics are more likely to have limited credit history: About 15% of Blacks and Hispanics are credit invisible and 13% of Blacks and 12% of Hispanics have unscored records. This compares to only about 9% of Whites and Asians who are credit invisible and only about 7% of Whites who have unscored reports.

Noticeably absent from the Report are any recommendations to the industry as to how to address the concerns highlighted by the Report.  However, one thing appears certain – the Report is likely to be used as a foundation for concerns with fair lending down the road and consumer reporting agencies and users of credit reports should take careful note of the Report.  While no further rulemaking as to credit reporting appears imminent (based upon the CFPB’s Spring Rulemaking Agenda), interested parties should closely follow developments as to credit reporting within the CFPB.   

A special thanks to Lorne McManigle, a UNC law student for her assistance in preparing this blog entry.