Definition
An unscorable is a consumer that lacks enough traditional credit to calculate an accurate credit score.
Analysis
Fair Isaac Corporation is generally credited with first labeling those left out of traditional credit markets as unscorables. Their study concluded with an estimate of 50 million Americans that lacked enough credit to provide them with a credit score.
Unscorables may have a credit file, but there is not enough information reported by creditors in order to calculate a score. Many of these individuals have credit accounts, but these may not have been reported to the credit bureaus by the lender.
Alternative forms of credit, such as rent payments or utility bills normally do not appear on traditional credit reports. In order to address the needs of lenders seeking new markets, Fair Isaac and several credit bureaus began testing various risk scoring models that utilized non-traditional forms of credit.
