Definition: A thin credit file is a credit history that has few, if any, credit accounts. If you have a thin credit file, you may have trouble getting a credit report or credit score. This also means that creditors and lenders can’t pull your credit file and will probably reject your loan application. If you get approved, you may not get the best interest rate.
Certain groups of people are more likely to have a thin credit file. According to FICO, creator of the FICO score and FICO Expansion Score, this includes recent immigrants, young adults, people who have recently been divorced or become widows, or people who mainly use cash.
If you have trouble getting a new credit account, ask the lender to use the VantageScore or FICO Expansion score. Both these credit score solutions are a little more lenient on new borrowers and may give you a credit score when a traditional FICO score would not. Unfortunately, some lenders won’t consider these non-traditional credit-scoring methods for borrowers who have thin credit files.
You can begin building your credit by getting a credit card with a lender that typically approves borrowers with thin credit files. This includes retail and gas credit cards. You might also apply for a credit card at the bank where you have your checking or savings account. Finally, a secured credit card may be the last resort to building up your thin credit file.