A Path for Creditless but Reliable Americans to get Scored
A Path for Creditless but Reliable Americans to get Scored
by Adam | April 29, 2024
Credit scores today are a tool which tends to keep loan rates high for the poor and low for the rich. They’re meant to act as an indicator of the reliability of an individual when entering a loan. In the pursuit of this end, they’re effective. Although that’s not to say that they’re perfect.
Most worryingly, there are lots of Americans today who don’t interact with credit but who are entirely reliable. Some people don’t like credit cards, others could be new divorcees, or immigrants, or are simply new to credit. These people, even while paying their bills and taking care of themselves for years, can have entirely invisible credit.
This is hard because when these Americans apply for a loan, they’ll either be denied or given a terrible rate. Credit in this case isn’t a marker of reliability and the likelihood to repay the loan. Instead, it acts as a marker of not having any credit sources. This is where alternative scoring methods come in.