Tag: unscoreable
Credit plays a vital role in the lives of consumers and helps them meet important milestones – like getting a car and buying their own home. Unfortunately, not every creditworthy individual has equal access to financial services. In fact, 28 million adult Americans are credit invisible and another 21 million are considered unscorable.1 By leveraging expanded data sources, you can gain a more complete view of creditworthiness, make better decisions and empower consumers to more easily access financial opportunities. The state of credit access Credit is part of your financial power and helps you get the things you need. So, why are certain consumers excluded from the credit economy? There’s a host of reasons. They might have limited or no credit history, have dated or negative information within their credit file or be part of a historically disadvantaged group. For example, almost 30% of consumers in low-income neighborhoods are credit invisible and African and Hispanic Americans are less likely than White Americans to have access to mainstream financial services.2 By gaining further insight into consumer risk, you can facilitate first and second chances for borrowers who are increasingly being shut out of traditional credit offerings. Greater data, greater insights, greater growth Expanding access to credit benefits consumers and lenders alike. With a bigger pool of qualified applicants, you can grow your portfolio and help your community. The trick is doing so while continuing to mitigate risk – enter expanded data. Expanded data includes non-credit payments, demand deposit account (DDA) transactions, professional certifications, and foreign credit history, among other things. Using these data sources can drive greater visibility and transparency around inquiry and payment behaviors, enrich decisions across the entire customer lifecycle and allow lenders to better meet the financial needs of their current and future customers. Read our latest white paper for more insight into the vital role credit plays within our society and how you can increase financial access and opportunities in the communities you serve. Download now 1Data based on Oliver Wyman analysis using a random sample of consumers with Experian credit bureau records as of September 2020. Consumers are considered ‘credit invisible’ when they have no mainstream credit file at the credit bureaus and ‘unscorable’ when they have partial information in their mainstream credit file, but not enough to generate a conventional credit score. 2Credit Invisibles, The CFPB Office of Research, May 2015.
As millennials continue to experience challenges in obtaining credit, Experian’s latest research finds that this population is very receptive to nonbank lenders for the ease, speed and accessibility they provide.
According to a recent survey commissioned by VantageScore® Solutions, millennials cite being unscoreable as the main obstacle to credit access. Among the findings: One-third of millennials cannot obtain the credit they need Of those unable to obtain credit, 34% attribute it to lack of a credit score 49% of millennials agree that competition in the credit-scoring marketplace is beneficial Lenders can help this segment and open the gateway of credit by using advanced risk models that can accurately score consumers considered unscoreable by conventional risk models. >> Infographic: The Giant Credit Gap VantageScore® is a registered trademark of VantageScore Solutions, LLC.
According to VantageScore® Solutions' annual validation study, VantageScore 3.0 scores 36 million incremental consumers considered unscoreable by conventional credit scoring models.
According to research from VantageScore® Solutions LLC, 30 to 35 million people are not scored by the most popular credit-scoring models. When measured by more modern scoring methodologies — methods that leverage the data that exists in a person's credit file better — as many as 10 million of these unscoreable consumers were found to have prime or near prime credit scores. The study reinforces the importance of using advanced credit scores in order to profitably grow portfolios while providing consumers with access to fair and equitable credit. Credit Scoring Gaps Are Leaving Millions of Consumers Behind VantageScore® is a registered trademark of VantageScore Solutions, LLC.
The average unscoreable consumer has a good job and a better-than-adequate credit profile. Sixty-one percent of unscoreable consumers hold professional level or skilled labor jobs, 30 percent have credit profiles that fall into the super prime/prime category and 20 percent are considered near-prime.