What is a thin credit report?

If you have a thin credit report, it means that there is not enough information on your credit reports to generate a credit score.

A thin credit history makes it difficult to get credit approved, but you can consolidate it and make yourself more attractive to creditors.

Who is likely to have a thin credit history?

Almost everyone’s credit history is slim at some point. You are more likely to end up with a thin credit report if:

  • You are new to the world of credit.

  • You recently immigrated to the United States.

  • You avoid credit and manage your finances with cash or debit cards.

  • You are newly single, and you had little or no credit on your behalf.

Three major credit bureaus – Equifax, Experian, and TransUnion – collect data about your credit usage and organize it in your credit reports. If you recently got your first credit card or loan, the lightweight one-file solution can be as simple as waiting for the information to be reported to the bureaus.

If you’re a credit veteran with still-valid credit cards, start using them, even if it’s just to pay for a cup of coffee. If you find that an account has been closed for inactivity, you may be able to ask the issuer to reactivate it. Otherwise, restore credit using the same tools a beginner would use to create credit.

Know how your credit is rated

See your free score and the factors that influence it, as well as information on how to keep building.

How to fatten a thin credit report

Credit builder loan: If you’re just starting out with credit, a credit builder loan can help. You generally don’t have to have a credit history or score to qualify, and monthly payments can be as low as $ 25. With this type of loan, you make all the payments first, then you get the money at the end, minus interest and administrative fees. During the life of the loan, your payments are reported to the three major credit bureaus. If you regularly pay on time, you will build your record and your creditors desire. Credit unions generally provide loans to creditors, as do some businesses such as Self and Kikoff.

Secure credit card: A secure credit card can also help to pad a thin file. You “secure” the card with a cash deposit, often starting at $ 200, then it works like a traditional credit card. The amount of your security deposit is usually the credit limit, but there are exceptions. There is even some unsecured alternative cards that do not require a credit score for approval. Always check that a card issuer will report your activity to the credit bureaus, so you know you are requesting a card that will be on your record.

Authorized user: Become a 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 on-time payment that is lightly used (the the balance does not exceed 30% of the credit limit, and less is even better). You do not need to use the card as an authorized user to use it. Obtain a co-signer can also help, but that’s a big request because the co-signer is completely on the hook if you don’t pay as agreed.

One caveat: before requesting more than one credit product, ask if your request will involve a “difficult investigationBecause too many close inquiries can make you look risky. It is preferable to space applications approximately six months apart. (Many credit-creating products do not require a credit check; check it before you apply.)

When will I get a credit score?

You can have a score even if you have a slim credit history. The credit score that most lenders check when you apply for credit is FICO 8. FICO score, you usually need:

  • At least one credit account open for at least six months.

  • Activity reported to one or more credit bureaus in 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 has been reported to the credit bureaus.

How can I use my credit score and report?

Many personal finance websites offer free credit scores; look for the one that also offers free credit report information. You can get a free credit report summary and the 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 the same way lenders and card issuers do. It provides great feedback while you work build your credit score. You will also be able to see what a lender or card issuer is reporting and when they are reporting it.

Each lender decides how much credit is “sufficient” to be approved. For some, just one account opened for a few months may not be enough credit experience.

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 was better to have a mix of accounts, both credit cards and installment loans.

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