Digital Divide Plays Role in Credit Invisibility

Creditworthy consumers can face difficulties accessing credit if they lack a credit record that is treated as "scorable" by widely used credit scoring models. These consumers include those who are "credit invisible," meaning that they do not have a credit record maintained by one of the nationwide consumer reporting agencies (NCRAs). They also include those who have a credit record that contains either too little information or information that is deemed too old to be reliable.

Lack of internet access appears to have a stronger relationship to credit invisibility than does the presence of a bank branch: While younger adults residing near bank branches in highly urban areas used credit cards as entry products more often than those residing further away, overall we found little relationship between distance to the nearest branch and the incidence of credit invisibility. In contrast, our research did find that many credit products are originated through online means, causing credit invisibility to be more prevalent in areas with less internet access.