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Financial Inclusion

One in ten U.S. adults are credit invisible, or have no credit at all

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  • Written by  Wil Lewis, Chief Diversity, Equity and Inclusion Officer at Experian
Financial Inclusion

According to the Credit Invisible Policy Report by the Consumer Financial Protection Bureau, one in ten U.S. adults are credit invisible, or have no credit at all, making it more difficult for them to access financial services and resources. To put that into context, a total of 26 million U.S. adults are without a credit history, causing them to be stuck in a cycle of financial disadvantage.

These consumers are essentially invisible to lenders, making it more difficult to access loans, credit cards, higher borrowing limits, low interest payments and longer repayment periods, which make them more susceptible to bankruptcy.

But it’s not just consumers with no credit history, those with limited credit histories are also impacted. Together, credit invisible consumers and consumers who lack sufficient credit history make up almost 20 percent of the entire United States’ adult population. Making sure everyone has access to fair and affordable credit – regardless of their race, ethnicity, gender or marital status—is especially important as we continue to navigate the pandemic and recover from the economic fallout.

Allowing exclusory practices to persist only serve to widen the wealth gap. Financial exclusion is detrimental to individuals, and it has ripple effects felt by the entire nation, slowing economic growth and prosperity.

During a time of great economic uncertainty, financial inclusion is one of the most important engines of economic development. Undoubtedly, we’ve all suffered due to the pandemic; however, underserved and vulnerable communities have suffered the most. Ensuring the economic growth of these communities is essential for the nation at large. Communities without access to the proper financial tools are consistently at higher risk for losing basic fundamental necessities, and are also unable to succeed and flourish under current conditions. Financial institutions are placed at a critical threshold between underserved communities and their future livelihoods.

Banks need to help clients create and provide more affordable access to credit by using data, analytics and technology. Financial institutions can help close the wealth gap by providing consumers with financial education, resources for small businesses and strengthening security measures against fraud. Financial institutions need to work with communities and provide solutions to bring about racial equity so consumers can achieve their life goals.

The current credit ecosystem has used its data and technology to support the use of additional data sources, such as phone bills, utility bills and rent payments. These additional types of accounts provide those who are either have no credit file (invisible to the credit ecosystem) or thin-file (limited credit history) increased access to affordable mainstream sources of credit. For example, in 2019, we launched Experian Boost™, a free tool that allows consumers to add positive payment history directly into their Experian credit file for an opportunity to instantly increase their credit score.

To date, we have helped nearly 8 million consumers who have used Boost add more than 50 million cumulative points to their FICO® scores. By tapping into new credit scoring models that go beyond traditional credit data, financial institutions can minimize their future risk while simultaneously increasing their customer base.

The opportunities provided by financial inclusion are numerous, and they all serve to foster growth. One of the most important opportunities provided is the ability to pay for the education of new generations. According to Brookings Institute, a child born into a low-income family without earning a college degree has a 45 percent chance of remaining low-income as an adult, with only a 5 percent chance of moving into the highest earnings group. However, a low-income individual with a college degree has an 84 percent chance of moving into higher earnings groups—including the highest. To this point, education contributes to a boost in economic earnings for adult children from low-income families. For this reason, education is imperative as it remains one of the biggest factors in achieving upward social mobility.

During the pandemic, we’ve seen the unemployment rate hit 14.8 percent, an all-time high. Financial inclusion ensures that individuals can deal with financial shocks like unemployment. It also provides individuals with the resources to start new businesses, a value that we’ve seen mimicked by Congress’ssmall business lending program. Small businesses alone account for 64 percent of new jobs created annually, boosting the economy. The ability for everyone to access financial services is pivotal in order to sustain a cycle of community growth and break cycles of poverty.

To increase financial inclusion, it’s imperative for financial institutions to proactively provide access to credit, savings resources, online mobile banking, and financial education. Providing these resources make it possible for individuals, businesses and communities to thrive today, tomorrow and years from now. If they provide the knowledge necessary to make educated decisions, institutions can empower whole communities, ensure that the next generation is even more capable, and make the future of the country even brighter.


Wil Lewis is the Chief Diversity, Equity and Inclusion Officer at Experian

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