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If you have a thin credit file, it means that there’s not enough information in your credit reports to generate a credit score.
A thin credit file makes it difficult to get approved for credit, but you can bulk up that file and make yourself more attractive to creditors.
Who’s likely to have a thin credit file?
Just about everyone’s credit file is thin at some point. You are most likely to find yourself with a thin credit file if:
You are new to the credit world.
You recently immigrated to the United States.
You avoid credit and handle your finances with cash or debit cards.
You had credit but stopped using it, so the information is too old to be scored.
You are newly single, and you had little or no credit in your own name.
Three major credit bureaus — Equifax, Experian and TransUnion — gather data about your credit use and organize it into your credit reports. If you have recently gotten your first credit card or loan, the solution to a thin file can be as simple as waiting for the information to be reported to the bureaus.
If you’re a credit veteran with credit cards that are still valid, start using them, even if just to pay for a cup of coffee. If you find an account was closed for inactivity, you might be able to get the issuer to reinstate it. Otherwise, re-establish credit using the same tools a newbie would use to build credit.
How to fatten up a thin credit file
Credit-builder loan: If you are just getting started with credit, a credit-builder loan may help. You’re not typically required to have a credit history or score to qualify, and monthly payments can be as little as $25. With this type of loan, you make all the payments first, then receive the money at the end, minus interest and administrative fees. Over the length of the loan, your payments are being reported to the three major credit bureaus. If you consistently pay on time, you'll build your file and your desirability to creditors. Credit unions typically offer credit-builder loans, and so do some companies such as SeedFi, Self and Kikoff.
Secured credit card: A secured credit card can also help pad a thin file. You “secure” the card with a cash deposit, often starting at $200, and then it works like a traditional credit card. The amount of your security deposit is typically the credit limit, but there are exceptions. There are even some alternative unsecured cards that do not require a credit score for approval. Always verify that a card issuer will report your activity to the credit bureaus, so you know you're applying for a card that will build your file.
Authorized user: Becoming an authorized user on someone else’s credit account can also help. The best scenario is to ask a loved one who has a credit card with a long history of being paid on time and that is lightly used (the balance is no more than 30% of the credit limit, and less is even better). You don't need to use the card as an authorized user in order to reap the benefit. Getting a co-signer can also help, but it’s a big request, because the co-signer is completely on the hook if you don’t pay as agreed.
One caution: Before you apply for more than one credit product, ask if your application will involve a “hard inquiry,” because too many inquiries close together can make you look risky. It’s best to space applications out about six months. (Many credit-builder products do not require a credit check; verify that before applying.)
When will I have a credit score?
You can have a score even if you have a thin credit file. The credit score most lenders check when you apply for credit is the FICO 8. To have a FICO score, you generally need:
At least one credit account open for at least six months.
Activity reported to one or more credit bureaus during the past six months.
VantageScore, FICO’s main competitor, can generate a score much sooner. You can have a VantageScore in as little as 30 days after a new credit account is reported to the credit bureaus.
How can I use my credit score and report?
Many personal finance websites offer free credit scores; look for one that also offers free credit report information. You can get a free credit report summary and VantageScore 3.0 credit score on NerdWallet, and both update weekly so you can track your progress.
Tracking your score and report can help you see your credit profile much the way lenders and card issuers will. It provides good feedback as you work to build your credit score. You will also be able to see what a lender or card issuer is reporting, and when they report it.
Each lender decides how much credit is “enough” to be approved. For some, a single account open for a few months might not be sufficient experience with credit.
How many accounts do you need? Credit expert John Ulzheimer says you want at least four credit accounts because anything less than that will limit your score. He said it’s best to have a mix of accounts, both credit cards and installment loans.