Written by: Eric Bank
Edited by: Lillian Guevara-Castro
Reviewed by: Adam West
Key Takeaways
- The CFPB currently reports only 2.7% of American adults are truly credit invisible — significantly less than initially thought.
- The real challenge is with the 25.3 million Americans who have credit files without scores.
- Lenders have a clearer picture of who they can serve with safer, cheaper credit.
In 2015, the Consumer Financial Protection Bureau reported that more than 25 million Americans were credit invisible — meaning they did not have a credit profile.
But updated findings show that number was far too high, and the figure has now been cut by more than half. This changes how banks and fintechs develop financial inclusion products.
The CFPB now says just 2.7% of adults — roughly 7 million people — were credit invisible in 2020. That updated number came after the Bureau identified gaping holes in 2015 data. The prior report excluded many student loans and other records, making the invisible population far bigger than it really was.
The CFPB now has an improved 2% representational sample of the anonymous data from one of the largest (unnamed) credit bureaus. This allows it a clearer view of the credit situation throughout the nation.
More Unscored Than Expected
The big news isn’t the smaller hidden group — it’s the size of the unscored group. These are consumers with credit files but too little activity for them to be scored. The CFPB now reports 9.8% of adults — roughly 25.3 million — were unscored in 2020. That’s larger than projected.
Jennifer Tescher, founder and CEO of the Financial Health Network, said, “We now have a clearer view of how many consumers are actually unscorable. We now know the invisible population is smaller than we thought. On the other hand, the population with a credit file but no score is larger than previously estimated. That group is now more important to focus on.”
Those who are unscored do not have a credit score and often lack enough activity to be scored. That can keep them out of loans, rentals, or other required services — even if they technically have a credit history.
A Growing Credit-Scored Majority
The report also finds that there are more Americans with credit scores than we knew. In 2020, 87.5% of adults — 225.3 million, roughly — had a score. That’s up from 81.6% back in 2010.
This trend also matches other signs of rising financial inclusion. For example, the percentage of unbanked households dropped from 8.2% in 2011 to 5.4% in 2019, according to the FDIC.
Having a bank account or basic credit product helps people build credit files and scores. Those without scores or visibility often don’t use banks, another factor hindering credit establishment.
What This Means for Lenders
These new figures are a game-changer for banks and fintechs. Instead of hoping to serve an enormous invisible population, they can consider serving the unscored by having them actively engaged — like through secured cards or instruments based on cash flow.
Consumer Bankers Association CEO Lindsey Johnson sees the new numbers as a big opportunity for America’s leading Main Street banks to make available safer and lower-cost credit products to millions of additional Americans for their day-to-day needs.
Kelvin Chen, the CBA’s policy chief, responded that the approach could change our thinking about the problem.
On LinkedIn, he wrote, “If credit invisibility is this rare, is it time to rethink the approach? Credit invisibility may one day not need sweeping public health campaigns or product innovation but instead case-by-case treatment plans.”
While the number of invisibles has dropped, the need for inclusion work has not diminished. The focus should shift to those who are inactive rather than trying to find the missing.
