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Big Banks May Offer Credit Cards to Those with No Credit History

Banks will begin issuing credit cards to applicants with no credit history as early as this fall. According to a report in the Wall Street Journal (WSJ), some of the country’s largest banks will begin sharing customer data regarding deposit accounts to improve access to credit. Here is what you need to know about the new collective pilot program from Chase, U.S. Bank, and Wells Fargo.

Chase, Wells Fargo, and U.S. Bank to Share Data to Improve Credit Access

Having no credit history is one of the biggest barriers to credit that Americans face. Now, three of the largest banks in the United States are seeking to extend access to credit through a collective pilot scheme, according to the WSJ.

J.P. Morgan Chase, U.S. Bank, and Wells Fargo are planning to “start sharing data on customers’ deposit accounts as part of a government-backed initiative to extend credit to people who have traditionally lacked opportunities to borrow,” the report states. The program, expected to launch this fall, is aimed at those Americans without credit history or credit score, but a demonstrable history of financial responsibility.

Under the joint pilot program, banks will share information about deposit accounts of applicants for credit cards, mortgages, and other credit products. This process will provide greater transparency on the financial responsibility of applicants instead of relying solely on credit reports and their banking history with that particular bank.

Big Banks Following the Examples Set by Fintech Credit Cards

The new program is a radical shift in how banks assess the creditworthiness of applicants. Previously, banks have relied on credit reports and scores from the major credit bureaus, Equifax, Experian, and TransUnion. While this process has been successful, it overlooks the more than 26 million Americans that are “credit invisible.”

According to the Corporation for Enterprise Development (CFED), approximately one in five Americans have no credit score. Another 31% have subprime credit, meaning over half the adult U.S. population has a poor or no credit score.

Adding new ways of judging the financial responsibility of credit card applicants is something the fintech sector has been innovating for several years. Credit cards like the Brex Corporate Card, SoFi Card, Jasper Mastercard, and others collect several types of economic data to judge the creditworthiness of applicants. Now, it seems, big banks are following suit.

Related Article: How Long Does It Take to Repair Your Credit Score?

Featured photo by Sarah Pflug / Burst
About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.