Certified financial planner David Rae says he used to think that “anyone who could draw breath” could get an auto loan. Then one of his millionaire clients tried to buy a car — and failed.
The 42-year-old client was turned down for a loan because he had no credit scores, says Rae, who is based in Los Angeles.
Nineteen million American adults are “unscoreable,” lacking enough recent credit history to generate credit scores, according to the Consumer Financial Protection Bureau. They either have “thin” files, with too few accounts, or “stale” ones that haven’t been updated in a while.
Roughly 7 million of these people are what credit scoring company FICO calls “credit retired.” They no longer actively use credit, but their histories are free from charge offs, collections or other negative marks that might indicate that “their exit from the credit mainstream was involuntary,” says Ethan Dornhelm, FICO’s vice president for scores and predictive analytics. Continue reading