Credit: The Good, the Bad and (Also Bad) the Invisible

Some 26 million Americans lack a credit file, which has an impact that goes beyond difficulty accessing loans. Here’s the problem.

No credit history can sometimes be as difficult to deal with as bad credit.

A new report reveals the challenges 1 in 10 American consumers face because they have no credit history on file, which puts them in a bad position when trying to be approved for a loan or a credit card, and can even hurt their chances of landing a job or rental housing.

According to the Consumer Financial Protection Bureau, 26 million Americans, including a disproportionate number of young adults, Black, Hispanic, and low-income consumers, are “credit invisible,” meaning they have no credit histories with the big credit reporting agencies (Equifax, Experian and TransUnion).

About 19 million more Americans have a limited amount of credit history, but not enough to determine a score.

“A limited credit history can create real barriers for consumers looking to access the credit that is often so essential to meaningful opportunity—to get an education, start a business, or buy a house,” CFPB director Richard Cordray said in a statement:

Credit history, which may contain information about credit card bills, student loans, bank loans, car loans and mortgages, is used to determine how likely consumers are to repay debt. So creditors rely heavily on credit reports when making decisions about granting credit or setting interest rates on a loan.

Cordray said:

When consumers do not have a credit report, or have too little information to have a credit score, the impact on their lives can be profound. It can preclude them from accessing credit and taking advantage of certain opportunities. And given that we found that consumers in low-income neighborhoods are more likely to be credit invisible or unscored, this may be limiting opportunities for some of the most economically vulnerable consumers.

Are you lacking a credit history? Check out “7 Ways to Build Your Credit Score Without a Credit Card.”

You can also find more tips here, “5 Steps to Build a Credit Score From Scratch.”

Have you struggled to build a good credit history? Share your experiences below or on our Facebook page. And share this article with your Facebook friends.

Stacy Johnson

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