Many Americans struggle with gaining access to credit, but alternative data, which is Fair Credit Reporting Act compliant information, is helping to score at least 32% of consumers who were previously considered unscorable through specialty finance data and telco and utility data. The main reasons why more than 70 million Americans are facing challenges with getting into scorable credit bands is because they have thin files or are credit invisible. This means they either have a very limited credit history or do not have one at all.
Currently about 76 million Americans have barely any credit history with about 61 million having “thin” credit files or having less than four credit accounts and about 16 million being considered credit invisible. These people are usually those who are new to using credit, are young, have immigrated recently, don’t use credit frequently, or are usually using cash. Unfortunately, being credit invisible can cost a lot in the long-run, especially when taking out a loan or paying a mortgage.
However, using alternative data can help these people head into scorable credit bands. In fact, at least 13 million U.S. consumers could obtain a prime credit score. Utility and telco data could help at least 6 million people become scorable while using this data with specialty finance data can help an additional 2 million people score better and gain access to more financial opportunities.
With alternative data, more than 8 million people can start to benefit from a positive change in their credit score.
