According to the Federal Deposit Insurance (FDIC) 106 million people in the United States are either underbanked or unbanked. To be unbanked or underbanked means that you do not have bank accounts such as checking or savings accounts and therefore have to make non-bank financial transactions. In addition, 1 in 5 households has 0 or negative assets. 

The “Invisible” Americans 

1 in 10 Americans do not have a credit score which makes them invisible to the mainstream U.S. financial system.

In 2015 the Consumer Financial Protection Bureau reported that 1 in 10 American consumers had no credit history. This means that 26 million American adults had no histories with national credit reporting agencies. 19 million had credit reports that were limited or out of date meaning that they were unscorable. These numbers show that about 45 million American consumers were living without credit scores in 2015. Today there as been little movement with the numbers, as about 14% of the American population does not have a credit score.

Study shows that age and poverty are great contributors to the invisible Americans. More than 80% of 18 and 19-year-old lie in this category of the credit invisible Americans. This is understandable given obtaining a credit card at this age is relatively more challenging as individuals generally require someone to co-sign for them, and the types of credit cards available to them are limited. This number drops to less than 40% of these people having credit cards by the age they are 24, however it increases again for individuals over 60 years old. African Americans and Hispanics have a rate of 15% credit invisibility while whites have a rate of about 9%.  

Why being “Visible” is important 

Being credit visible would mean that a person participates in the financial markets, and they have an existing credit score. This is important because an individual without access to financial services and credit would find it difficult to build their life. Borrowing money, buying a home, starting a business, etc becomes almost impossible. A credit score that is derived after acquiring a credit card, establishes one’s financial status with regards to financial trust and responsibility. A relatively higher credit score means that you can be trusted to borrow and pay back money. Individuals are, therefore, able to take loans with lower interest rates, and get better mortgage rates, and better rates when buying a vehicle. The average FICO credit score in the United States is 687, where the FICO credit score ranges from 300 to 850.