What Does It Mean to Have a Thin Credit File?
If you are looking to obtain credit and are having difficulty getting the financing you need, it may be because you have what is known as a thin credit file. If you have heard this from prospective creditors in the past, understanding what it means can help you to be more successful in trying to gain credit in the future.
Basically, a thin file means you do not have a robust credit history. This makes it difficult for creditors to determine whether or not you are a reliable borrower, which may make them reluctant to work with you. There are a number of possible reasons why your file might be thin.
You’ve Never Had Credit Before
This is a common situation for young people who have never taken out a loan or used a credit card before. Because you don’t have any history of credit, potential creditors have no idea whether you will use your credit wisely or not, making you somewhat of a risky investment for them. Asking your parents or other trusted loved ones to act as co-signers for you can help you to obtain the credit you need to start building your own credit history.
You’re in the Process of Re-Establishing Your Credit
If you went through a bankruptcy in the past and had to close all of your credit accounts, you won’t have any credit history left when you go to re-establish your credit in the future. As with those who have never had credit before, it may help you to obtain a co-signer for any loan or credit card you wish to take out.
The Credit Bureau Thinks You’re Deceased
While this is not a common occurrence, it is possible for the credit bureau to have closed your file because they believe you to be deceased. This can happen due to clerical errors or if you have a relatively common name. Your best course of action is to alert the bureau that you are not, in fact dead, and wait for the error to be corrected before reapplying for credit.
Your Credit File Is Split
This is another uncommon occurrence that is likely due to clerical errors like misspelling your name or neglecting to merge files with multiple names, like if you changed your surname following a marriage. Contact the credit bureau to have this fixed before applying for credit. Once the error has been corrected, you are likely to have better luck in obtaining credit.