Thin File

A thin file is a financial designation of having a limited credit history. Having a thin file can make it difficult to get credit or get approved for a loan, but some lenders will consider other payment information not included in credit reports. A consumer who has had few or no loans or credit cards will have a thin file.

How is a thin file determined? Anytime a consumer applies for a line of credit, whether it be a credit card or a loan, the originator or third-party organization runs a credit check to determine the individual’s credit score. If the consumer does not have enough information in their background, which may occur for young consumers or those who are new to using credit cards, the score will generate as a thin file from the credit bureau. You could also end up with a thin file in the rare case that a credit bureau has you listed as deceased.

If you have a thin file and want to borrow money or build your own credit score up, you have several options. The simplest option, because it relies on actions you’ve already taken, is to ask the lender to consider repayment histories that usually aren’t reported to the credit bureaus, such as utility payments and rent payments. If you’re applying for a mortgage, for example, Fannie Mae says lenders can construct a nontraditional credit history for a consumer with a combination of your bank statements, canceled checks, bills marked as paid, and reference letters from creditors and landlords.

Another option that requires more time and effort is to obtain a secured credit card and start building a credit history. A secured credit card requires you to deposit an amount of money that will serve as your credit line, so it effectively functions as a debit card. Because it is technically a credit card, however, your payment history will get reported to the credit bureaus and help you establish a credit score after several months. Make sure to get a secured credit card that will report your payment history to all three major credit bureaus and make sure to pay your bills in full and on time because you don’t want to build a poor or mediocre credit history, you want to build a strong one. Also, look for a secured card with a low or no annual fee.