The CFPB 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. The Bureau is seeking public feedback on the benefits and risks of tapping 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 bureau will explore whether alternative data could improve access to credit, increase the complexity of the process, have an impact on costs and services, have privacy or security implications or unfairly impact a specific group.
Traditional credit history includes a borrower’s payment of debts such as mortgages, credit cards, and other loans. It is used by lenders to decide who can get credit and what it will cost. The bureau estimates that 26 million Americans are credit invisible, which means they have no credit history with a nationwide consumer reporting agency. An additional 19 million lack sufficient credit history to produce a credit score under most scoring models.