CFPB research links geography with credit invisibility

by Francis Monfort20 Sep 2018

Where a person resides and access to the internet are factors that can impact their credit visibility, according to research released by the Consumer Financial Protection Bureau.

Credit invisible consumers are those who do not have a credit record maintained by one of the nationwide consumer reporting agencies or those whose records contain either too little information or information that is deemed too old to be reliable.

CFPB looked at the relationship between geography and credit invisibility given concerns related to redlining and other forms of unlawful discrimination. The study found that credit invisibility among adults 25 and older is concentrated in rural and highly urban geographies. CFPB observed that credit invisibility is more common in rural areas as a percentage of the population. There was also an elevated likelihood of credit invisibility in rural areas regardless of the tract’s income level, in contrast to a strong relationship between neighborhood income and the likelihood of credit invisibility in highly urban areas.

CFPB also found that credit invisibility is more influenced by a consumer’s access to the internet rather than by the presence of a bank branch. The study found little relationship between distance to the nearest branch and the incidence of credit invisibility. In contrast, CFPB found that many credit products are originated through online means, causing credit invisibility to be more prevalent in areas with less internet access.