According to a study released by the Consumer Financial Protection Bureau on May 5, 26 million Americans have no credit rating at all, making them “credit invisible.”  The report found that one in 10 adults have no credit history – many of them black, Hispanic, or living in low-income neighborhoods.

In broad terms, consumers with limited credit histories can be placed into two groups, the CFPB said.  The first group is consumers without a credit report, or the “credit invisibles.”  The second group, the “unscored,” includes consumers who do not have enough credit history to generate a credit score or who have credit reports that contain “stale” or not recently reported information.  The report showed that 19 million consumers in the U.S. have credit reports but are considered “unscorable” by most major credit scoring models.

“When consumers do not have a credit report … the impact on their lives can be profound,” CFPB Director Richard Cordray said in a call with reporters.  Not having a credit report can make it difficult to rent an apartment, secure certain jobs, or access traditional financial products like loans and credit cards.

The CFPB’s analysis was conducted using information from its Consumer Credit Panel, which is a random sample of de-identified credit records purchased from one of the nationwide credit reporting agencies and is representative of the population with credit records.  The CFPB compared information in the credit panel from December 2010 with 2010 Census data in order to estimate the number of consumers who were credit invisible or had unscored credit records.

“Today’s report sheds light on the millions of Americans who are credit invisible,” Cordray remarked.  “A limited credit history can create real barriers for consumers looking to access the credit that is often so essential to meaningful opportunity – to get an education, start a business, or buy a house.  Further, some of the most economically vulnerable consumers are more likely to be credit invisible.”