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Mellody is president of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS News.

Tom: This Money Monday you have an interesting topic for us: credit invisibility.

 Mellody: That’s right, Tom. Credit invisibility does not mean that no one can see your credit. People who are credit invisible have no credit history with the major credit reporting agencies. And while that might seem like it could be a good thing, it is in fact just the opposite. Without having a credit history, individuals can have a hard time with many transactions, and can exclude people from interacting in the mainstream economy.

 Tom: How many people are “credit invisible?”

 Mellody: The numbers are staggering. According to the Consumer Financial Protection Bureau, the agency that released the report detailing this phenomenon, nearly 26 million Americans currently lack a credit history. That is a nearly 11 percent of adults in America! Beyond that, there are another 19 million Americans whose credit histories are not extensive enough for the credit tracking agencies to create a score for them. These individuals account for another 8 percent of American adults. Combined, the Americans who fall in to one of these two categories account for almost 1 in 5 adults in the United States.

 And minorities are affected by this problem more than the population as a whole. Blacks and Hispanics, as well as those included in the “other” racial category, are notably more likely to be credit invisible or to have an unscored record than whites. And although Hispanics are slightly more likely than Black Americans to be credit invisible, Blacks appear to be more likely than Hispanics to have unscored records. The same is true for low-income individuals. For instance, 30 percent of those in low-income neighborhoods are credit invisible, compared with 4 percent in upper-income neighborhoods.

 Tom: How does this happen, and how does it impact people?

Money Mondays: Credit Invisibility  was originally published on

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