Credit Repair

4 Steps to Fattening Up a Thin Credit File

You already know that having bad credit can be a problem. But what about having a thin credit file? A thin credit file is the result of having too few credit accounts, a short credit history or inconsistent use of credit. Even if you’ve never missed a payment, having too little information in your credit report can saddle you with a low credit score.

If you have a thin credit file, you’re not alone. In 2015, 26 million Americans were “credit invisible,” which means they had no credit history at one of the three major credit bureaus, according to a study from the Consumer Financial Protection Bureau. Let’s take a look at some steps you can take to fatten up your credit file.

What to know about fattening up a thin credit file:

  • A thin credit file typically means having fewer than four accounts and less than six months of credit history.
  • A thin file can make it difficult to open new accounts because lenders can’t assess the risk of lending to you.
  • Try getting a secured or starter credit card, becoming an authorized user on someone else’s card or taking out a credit builder loan.

What is a thin credit file?

First, it can help to understand a little about credit. In the U.S., three major credit bureaus (Equifax, Experian and TransUnion) track how each consumer borrows and repays money.

This information is compiled for each consumer into a credit report, which is used to evaluate the consumer’s responsibility when applying for a loan, credit cards, utilities, an apartment or even a job. Your credit report is also the basis of your FICO credit score, a three-digit number that reflects your history and dependability as a borrower.

A credit report with only a brief credit history (less than six months) or too few accounts (typically one to four) could be considered a “thin” credit file. It can keep you from achieving the kind of credit score you want — people with six months of credit history might start out with a score of only 500. And if there isn’t enough data for the credit bureaus to work with, they could choose to give you no score at all.

How a thin credit file can hurt you

Lenders and scoring models view thin files as inherently risky, as there isn’t enough information to show a solid pattern of responsible borrowing behavior. It’s difficult for lenders and other companies that rely on credit histories and scores to decide whether someone with a thin file is a safe bet.

So lenders could play it safe and reject credit or loan applications from consumers with thin credit files. A lack of credit can have other, far-reaching consequences. You’re more likely to face higher interest rates, get a rental application denied or be required to put a deposit down for utilities or service contracts.

The good news is you can “fatten up” your credit file to boost your credit history and raise your credit score. Even people with good credit scores had to start somewhere. Here are some steps you can take to build your credit from scratch or add to your limited credit history.

4 steps to beef up a thin credit file

1. Apply for a secured credit card

To build credit, you need to have accounts on your credit file. But to open a credit account and add it to your credit history, you have to qualify — which often means passing a credit check. So, how can you get a credit account if you have a thin credit file?

One popular option is a secured credit card. These operate just like other credit cards, with a key difference: to open the account, you must put down a cash deposit.

You can open an account with as little as $50. However, the credit card issuer will hold your deposit and give you a credit card with a limit equal to your deposit. You’ll want to choose a deposit amount that is affordable but will also give you a decent credit limit.

Once you make this deposit, the credit card issuer will hold onto it and use it to “secure” your card. This just means that if you fail to pay back a balance you borrowed on the account, the issuer can keep the deposit to cover it. As you use your secured credit card and make on-time payments, this positive behavior will be reported to credit bureaus and help build out your credit file.

2. Open a starter credit card

A starter credit card can be a smart way to fatten a thin credit file, too. These accessible credit cards have flexible credit standards that make it easier to get approved, even with little or no credit history.

If you’re in college, for example, a student credit card can help build credit to prepare for life after graduation. And store cards can be easier to qualify for than other credit cards, so you’re less likely to be held back by a thin credit file.

To make the most of a secured or starter credit card, however, you’ll need to use it responsibly. Make every monthly payment on time, and always cover at least the minimum payment. You should also avoid charging more to your credit card than you can afford to pay off in full. Keeping your balance to 30% of your credit limit or less will help you keep a favorable credit utilization ratio, an important factor for your credit score.

3. Become an authorized user on an existing credit card

Another option is to ask a person with established credit (and good financial habits) to add you as an authorized user to one of their existing credit cards. This adds another account to your file, potentially boosting your credit mix and helping you build credit history at the same time.

Check with a parent, partner or someone else you’re close with to see if they’re willing to help. If they are, the cardholder may be able to simply log in to their online account and add you as an authorized user. Because you’re just being added to an existing account and not applying for new credit, there is no credit check and you won’t have to worry about a rejection.

4. Look into a credit builder loan

In addition to a secured credit card, you might also want to look into getting a credit builder loan.

These loans are designed to be accessible to people with bad credit or no credit, so you won’t have to worry about your thin credit file. Many banks and credit unions offer credit builder loans, so you can find a lender fairly easily. As you’re looking around, compare interest rates and make sure the bank will report your payments to the credit bureaus.

When you open the loan, the bank or credit union will not disburse funds to you — instead, it will put the funds in a savings account or certificate of deposit. You’ll then repay the loan in installments over a set period of time. Once you repay the loan, the funds will be paid out to you.

Good credit is key

If you have a thin credit file, don’t ignore it until it becomes a problem. There are accessible ways to open new credit accounts. Just be sure to use credit responsibly, and you’ll be well on your way to building a fatter and healthier credit file. Whether you’re aiming to rent an apartment, get a mortgage or qualify for low-interest loans, good credit will be key.


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