Twenty-eight million people have no credit history, making it difficult for dealers to sell them a car.
However, a new free service from Experian would allow these “credit invisibles” to generate an official credit score on the spot, according to the credit bureau.
The Experian Go initiative announced on January 26 creates an Experian credit report and score for consumers without a record who use the free Experian Boost program.
These reports should work for lenders who accept Experian credit scores, according to Jeff Softley, Experian’s president of direct-to-consumer business. For a lender, Experian Go users “look like any other consumer after going through the process,” he said. Automotive News Last week.
Experian Boost, which began in 2019, has helped nearly 9 million consumers improve their existing credit scores by choosing to provide payment details over cellphone, streaming, internet or utilities not found in commercial lines traditional. It also allows more than 10,000 “non-notable” people — people with a credit history but not enough to produce a score — to qualify for a FICO score each month, Experian said. Experian estimates that 21 million people fall into this category.
Now, consumers with no credit history can provide this data and receive an inaugural FICO score.
“And they’ll be able to do it without going into debt,” Softley said, calling it a first.
More than 15,000 of these credit-blind people got a credit report during the Experian Go pilot project, which started in October.
Experian estimated that the average credit-blind person would receive an initial FICO score of 665.
The credit bureau defines preferred scores between 661 and 780. The average new-vehicle borrower had a credit score of 733 during the third quarter of 2021, the most recent Experian data available. The average used vehicle borrower scored 675 on the transaction.
For 90% of Experian Go users who link eligible payment data to the system, “they get a credit score instantly,” according to Softley. He estimated the process could take as little as 20 to 30 minutes.
“We believe that every individual deserves the opportunity to reach their full financial potential, and we’re proud to be the only credit bureau with a program to help credit invisibles build their credit history in minutes,” said said Experian North America Craig Boundy in a statement. January 26.
Experian Go users will need a smartphone, social security number, ID and to have paid eligible bills with a bank account that can be linked to the system, according to Softley. Experian can accept payment records from 10,000 financial institutions, Softley said. (Prepaid cards or fintech outside the realm of traditional banks cannot be captured, he said.)
“We have good coverage,” he said.
The system is linked to the bank account to capture up to the last 24 months of payments, Softley said. At a minimum, Experian needs six months of payments to create the credit score, he said.