Twenty-six million Americans are “credit invisible,” or lacking enough credit history to generate a credit score—a factor most lenders use to evaluate loan applications. The Consumer Financial Protection Bureau (CFPB) has begun exploring alternative routes to determine creditworthiness, including cell phone bill and rent payment history, seeking feedback from the public on these and other assessment methods.
“Alternative data from unconventional sources may help consumers who are stuck outside the system build a credit history to access mainstream credit sources,” says CFPB Director Richard Cordray. “We want to learn more about whether this non-traditional approach can offer opportunities to millions of Americans who are credit invisible and how to minimize any risks in how this information is used.”
Specifically, the CFPB has issued a Request for Information on whether alternative data would boost credit accessibility and/or make credit decisions more complicated, as well as its impact on borrowers and lenders and privacy and security issues.
View the Request for Information here.
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