Stemming from their work on income volatility, the Aspen Institute’s Expanding Prosperity Impact Collaborative (EPIC) shifted their focus to their second and current issue – consumer debt. At the heart of consumer debt is credit. Households rely on credit to get by, often because savings are insufficient or have been depleted. For low-income families, the combination of income and expense volatility and limited access to credit can create serious challenges to their ability to make ends meet. Many become mired in expensive debt, creating a new burden that stretches their budgets even thinner.
Managing Director of Aspen’s Financial Security Program Joanna Smith-Ramani joins Petal Card’s Co-Founder and CEO Jason Gross to explore some of the problems surrounding access to credit. Specifically, they discuss credit invisibility and the 70 million individuals who qualify as credit “unscorable,” “invisible,” or “thin file.” Those individuals who are being cut out of the mainstream credit system are disproportionately likely to be young, people of color, or immigrants. And as half of the population is considered of the “non-prime” world, potential for abuse is higher than ever.
This video addresses these questions:
What does it mean to be credit invisible?
How do those who are credit invisible access credit?
What is our concern for credit invisibles as they start accessing credit?
In credit invisibles, who makes up that 70 million, and what part of our communities live in that place where credit is costly and leads to consumer debt?