Expanding Credit Access to Marginalized Groups

Having a good credit score is a necessity for most Americans. It can determine what they are able to purchase, from houses to cars. Without a decent score, consumers end up being faced with much higher interest rates, which can result in them shelling out hundreds of extra dollars over the course of a loan period. For example, people could end up paying an extra $400 more in interest for a $550 emergency loan over three months. 

There are 71 million people in the United States that suffer from having a subpar credit score due to either having a thin credit file or having invisible credit. 61 million Americans struggle with thin credit files, which are limited credit histories due to having less than four credit accounts. Moreover, sixteen million more Americans are credit invisible—that is, they have no traditional credit record at all. Most of the adults in these categories are either young, recently divorced, or immigrants and haven’t had the chance to establish their credit history. Thankfully, some more equitable ways of accessing credit are on the horizon. Alternative data is now being referenced by companies when evaluating customers. This is information that is compliant with the Fair Credit Reporting Act, but is not found in traditional credit reports. Using this data may allow 32% of previously unscorable consumers to be scored.

Expanding Access to Credit with Alternative Data

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