Equifax Inc. announced Monday that its working with Credit Builders Alliance to help Americans who are considered to be credit invisible.
More than 26 million consumers are effectively credit invisible because they have no credit record and another 19 million are "unscored" because they have an insufficient or stale credit history, according to a report released in May by the Consumer Financial Protection Bureau. That study was part of the agencys efforts to examine the flaws in the credit reporting industry.
Credit Builders Alliance is a non-profit with a mission of helping struggling households build credit.
"Lacking a credit report can impact these consumers' opportunities for gaining employment and qualifying for loans, often resulting in higher deposits for services such as cell phones and utilities. Quite simply, credit invisibility means fewer economic opportunities for these consumers, when, in fact, low- and moderate-income families need more financial options - not less," said Dara Duguay, executive director, CBA.The agreement with Equifax will allow those households to report loan data directly to the credit bureau.
Michael Gardner, senior vice president at Equifax, said the CFPB is dedicated to helping consumers be their "financial best and we put that saying to practice in every aspect of our business where possible. We support CBA's views that good credit is essential to achieving fiscal health and stability and have also pledged to fund a pilot program that will help credential 170 non-profits to report data to Equifax.
Innovative Changes, a CBA member that offers financial education, small-dollar consumer loans and credit building strategies, said the company's clients through the agreement will have their credit information known by more users of credit data, which contributes to better financial access.
Ken Brevoort, section chief within the CFPB's Office of Research, said in May that the agency studied the credit invisible population to gain a "better understanding of exactly what interventions are possible in the regulatory space or perhaps, industry initiatives that may improve the functioning of these markets for the consumers' wellbeing."