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26m Americans lack credit history, US consumer watchdog says
[WASHINGTON] One in 10 American adults have no credit history, and 8 per cent are considered "unscorable" by major credit reporting agencies, a survey released on Tuesday showed.
Blacks, Hispanics and low-income community residents are most likely to be among the 26 million US adults absent from the credit reporting system and the 19 million with insufficient information to generate a credit score, the US Consumer Financial Protection Bureau said. "This may be limiting opportunities for some of the most economically vulnerable consumers," CFPB Director Richard Cordray told reporters on a conference call.
The three major credit reporting agencies, Equifax Inc , Experian Plc and Transunion, generate credit reports and scores based on consumers' borrowing and payment habits, including bankruptcies and court judgments.
Banks, credit card issuers, mortgage companies and other lenders use credit reports to see if a consumer is financially responsible enough to repay loans.
The CFPB said it is unclear how the "credit invisible" borrow money, but noted that likely options include pawnshops and payday lenders which do not report to credit reporting agencies.
The bureau, created by the 2010 Dodd-Frank financial oversight law, said it will use data from the report to devise initiatives to address the problem.