Banks planning to issue credit cards to people without credit scores: report

Multiple major U.S. banks are planning to begin sharing data on customer’s accounts as part of a government initiative to provide credit to those who don’t have credit scores.

The Wall Street Journal reports that JPMorgan, Wells Fargo and U.S. Bancorp will begin considering an individual’s checking or savings accounts at other financial institutions to increase their chances of qualifying for a credit card. They would take into account an applicant’s account balance over time as well as their overdraft histories, people familiar with the matter told the Journal.

Sources told the outlet that around 10 banks have agreed to exchange information with each other. This initiative is part of the Roundtable for Economic Access and Change, or Project REACH, which was launched by the Office of the Comptroller of the Currency (OCC) last year.

It came about after the OCC met with leaders from the finance sector to find ways of increasing credit access to those who have historically lacked it. The Journal notes that a 2015 report from the Consumer Financial Protection Bureau found that Black and Hispanic adults are less likely to have credit scores than white and Asian adults.

The banks are reportedly discussing the use of credit reporting firms like Equifax, Experian and TransUnion to facilitate the data-sharing.

This will mark a significant shift in how lending operates in the U.S. People who have only paid with cash or debit cards as well as those who are new to the U.S. do not have credit scores, the Journal notes, representing around 53 million people without traditional credit scores.

“It’s not a Hail Mary,” chief executive of consumer lending at JPMorgan, Marianne Lake, told the Journal. “It’s something that we know works.”

Individuals who would qualify for credit under this new method could eventually qualify for auto loans, mortgages and other bank products.