How Point Predictive is a game changer for thin file and credit invisible consumers  

Credit Invisible

Traditional credit assessment models are unable to accurately assess the creditworthiness of millions of Americans. New tools help lenders serve this overlooked market.

Traditional credit scoring approaches have blind spots surrounding consumers with little or no credit history, instead relying heavily on borrowing and repayment records. This approach can lead lenders to be unaware of other factors that could provide a more comprehensive and accurate picture of an individual’s creditworthiness.   

Who are thin file and credit invisible borrowers? 

A thin credit file generally refers to a credit history with five or fewer total credit accounts, making it challenging for lenders and financial institutions to assess their creditworthiness accurately. Credit invisible borrowers, meanwhile, have no credit history at all. By some estimates, as many as 70 million Americans fall into one of these two groups. In either case, such borrowers tend to be new to the financial system, have taken out a few or no loans or credit cards, or have an incomplete credit history. 

They are often young adults, recent immigrants, or simply individuals who prefer to use cash or have limited access to credit. 

Where traditional credit models fall short   

Credit models examine a relatively narrow set of factors, chiefly the status and repayment histories of credit lines. This approach disregards the diverse financial behaviors of many individuals who may not fit the traditional credit mold. 

Additionally, traditional credit models tend to overlook the potential for positive changes and growth in an individual’s financial situation, instead heavily emphasizing prior negative behaviors (such as late payments or defaults). This makes it challenging for those who have faced financial hardships to rebuild their creditworthiness, effectively cutting off credit access for some consumers. Lenders, for their part, miss out on a segment of potential borrowers who may ultimately perform just as well as those with somewhat more attractive credit scores. 

How lenders can benefit from revisiting these borrowers 

Lenders miss out on a compelling business opportunity by neglecting the expansive market segment represented by thin file and credit invisible borrowers. By reaching out to this underserved group and providing tailored financial services, lenders could gain a competitive edge by offering suitable loan products and credit-building opportunities. 

Fortunately, there are tools that make it easier for lenders to serve thin file and credit invisible consumers. Point Predictive’s line of products helps lenders leverage a trove of data that is unavailable to traditional credit scores that are based on credit bureau information. 

Leveraging these solutions, lenders can gain a more accurate understanding of the income and employment risk presented by these borrowers, including insights into those who are marginalized by credit history and current credit scoring technology, to make more informed lending decisions and cater to a wider consumer audience with confidence.  

To learn more about Point Predictive’s solutions, speak with a product expert or schedule a free demo.   

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