New research outlines the challenges consumers face when trying to access credit, how the financial services industry can increase financial inclusion and score 96 percent of applicants
COSTA MESA, Calif., January 12, 2022–(BUSINESS WIRE)–Nearly 106 million U.S. consumers are unable to secure credit at mainstream rates either because they are credit invisible, unscoreable by conventional credit scores, or have a subprime or below credit score according to new research released today by Experian® and Oliver Wyman. The research shows that by using expanded data sets such as rental payments, trended data, utility information and more, and advanced analytics in their decisioning, lenders can improve access to credit for nearly 50 million credit invisible and unscoreable consumers, as well as millions of consumers currently considered subprime.
“We are committed to providing lenders with the right tools and insights to drive financial inclusion and have seen significant progress in recent years with many leading lenders leveraging expanded Fair Credit Reporting Act regulated data and advanced analytics,” said Greg Wright, Chief Product Officer and Executive Vice President at Experian Consumer Information Services. “Yet, as an industry, we can and must do better to ensure more consumers can access financial services at affordable rates. While the findings show we are moving in the right direction, financial access depends on complete industry adoption of new data and insights as well as business practices that proactively address the historical gap that’s existed in serving more consumers.”
Access to fair and affordable credit can help consumers get a college degree, buy a car or home, start or expand a business and ultimately help establish careers, build wealth and achieve greater financial success. Yet, in Financial Inclusion and Access to Credit, Experian and Oliver Wyman find 42 percent of the adult population lacks a conventional credit score in the range that would typically enable access to credit at mainstream rates.
Additional key findings include:
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Nineteen percent of American adults do not have a conventional credit score. This includes 28 million adult Americans who are credit invisible and 21 million who are unscoreable. An additional 57 million have subprime or below credit scores
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Credit invisibility more frequently impacts underserved communities with 26% of Hispanic consumers and 28% of Black consumers unscoreable or invisible compared to 16% of White and Asian consumers
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Credit invisibility often impacts younger consumers, with 40% of credit invisibles in the United States under 25
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Source: https://finance.yahoo.com/news/experian-oliver-wyman-expanded-data-110000686.html