Tackle the ‘credit invisibles’ to help close the racial wealth gap

Tackle the ‘credit invisibles’ to help close the racial wealth gap | Financial Times

Alternative methods aim to open up lending to people who lack conventional records

✒ For the Americans, without a score from one of the big three nationwide credit bureaus (Experian, Equifax and TransUnion), people often either can’t get consumer, mortgage or business loans.

Even if some could, they are unable to secure credit at mainstream rates because they are either credit invisible or unscorable by traditional methods, leading to subprime or lower credit scores.

Some financial institutions are experimenting with alternative methods to get around this problems, by using data not previously considered in credit scores, such as:

• Possession of professional licence;
• Asset ownership;
• Education;
• Rent payments;
• Utility bills; and even
• Video streaming subscriptions.