[NEWS] 10% of Americans are "Credit Invisible"
A recent article in the New York Times, reports that "about 26 million Americans lack a credit file." Ann Carrns continues by adding that these "credit invisible" consumers...lack any credit history with the major nationwide credit reporting agencies, which tends to shut them out of the economic mainstream. These findings are according to a report issued on May 5, 2015 by the Consumer Financial Protection Bureau.
"An additional 19 million Americans, or 8 percent of adults, have some credit history, but not enough to create a score. Eighty percent of adults, or about 189 million people, have credit scores."
A Quick Recap About Credit Scores
A credit score is essentially used to assess how likely it is that a borrower will repay a loan. The score measures the relative degree of risk that a potential person represents to a lender or investor and is based on several areas of information. Fair, Isaac Credit Bureau scores range between 300 to 850 points - the higher the score, the less risk associated with the borrower. Below are the three national credit data repositories that contribute to your score:
- Trans Union
So Why Is Not Having Credit (aka Credit Invisible) a Bad Thing?
According to the New York Times article - "When people lack a credit score, the impact on their lives can be “profound,” said Richard Cordray, the bureau’s director, in a call with reporters. Their lack of credit history can bar them from getting an education, starting a business or buying a house. “It can preclude them from accessing credit,” he said, “ and taking advantage of certain opportunities.”
If you don't have any credit card or loan activity, there's no information to create a score. Not having credit doesn't automatically mean you are low risk. It can actually signify that you have no experience managing credit and this can translate as a higher risk for banks and financial institutions.
What Can I Do if I'm "Credit Invisible?"
First we suggest that you check out this post on what contributes to a Credit Bureau Score so you can familiarize yourself with what factors are important. We also recommend talking with a financial professional to find the best ways to establish your credit safely and effectively.It's important that you understand how to successfully manage credit so you don't need to repair your credit down the road.
Read the entire original New York Times article here »
Midwest Equity Mortgage, LLC Now more than ever, you need to work with someone you can trust. Ask us about our A+ rating from the Better Business Bureau and you will know: you have found your lender! Why are you still waiting for the â€œbig bankâ€ to call you back? Get in touch with someone who cares-TODAY!
Midwest Equity on Google+
All information provided in this publication is for informational and educational purposes only, and in no way, is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Midwest Equity Mortgage, LLC does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Midwest Equity Mortgage, LLC do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.