The Consumer Financial Protection Bureau has launched an inquiry into ways to expand access to credit for consumers who are credit invisible or who lack enough credit history to obtain a credit score.
An estimated 26 million Americans have no credit history with a nationwide consumer reporting agency, what the CFPB terms credit invisible. Another 19 million consumers have an outdated credit history or one that is insufficient to produce a credit score under most scoring models, the CFPB said.
The bureau is seeking public feedback on the benefits and risks of employing alternative data sources –such as bills for mobile phones and rent payments – to make lending decisions about consumers whose lack of credit history might otherwise block opportunities.
Specifically, the CFPB wants information about access to credit; the complexity of the process; the impact on costs and service; the implications for privacy and security; and the impact on specific groups such as members of the military.
“Alternative data from unconventional sources may help consumers who are stuck outside the system build a credit history to access mainstream credit sources,” said CFPB Director Richard Cordray. “We want to learn more about whether this non-traditional approach can offer opportunities to millions of Americans who are credit invisible and how to minimize any risks in how this information is used.”