June 24th, 2010
What is a thin file?
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In the world of credit, thin is not a good thing. If you have a “thin file”, it means you have a limited or brief credit history or not enough credit accounts to generate a credit score.
Consumers with thin files have credit reports, though they often cannot pull their credit score, since there’s not enough credit data to generate one. Consumers with thin files are seen as credit risky and inexperienced with managing credit because they have a limited credit history.
If you face similar financial challenges because of your thin file, don’t give up just yet. Fattening up your thin file requires establishing credit and maintaining proper credit habits to build healthy credit. Here’s how to put some meat on your skinny credit:
- If you have a few credit cards open, use them! Establishing good credit isn’t just about having credit, it’s also demonstrating that you know how to use it regularly and responsibly. Put a small purchase on your credit card each month and pay it off on-time and in full. That’s the key to effective credit management to build credit.
- If you have other lines of credit, such as debts or loans, continue to pay those off on-time and in full too. The more you pay off monthly, the less debt you have. Less debt and positive credit management are boons for your credit.
- No credit whatsoever? A secured card is your best bet to establishing credit and ensuring a positive payment history. Secured cards are designed for consumers with little or no credit history, and are pretty much guaranteed approval. Some secured cards do not even require your credit score, which is ideal for those who have a thin file. Two of the secured cards we’ve reviewed before include the Public Savings Bank Secured Visa Card, which has no annual fee and a low APR, and the Capital One Secured MasterCard, which features a low annual fee and no processing fee.
Work on these three steps, and you’ll be beefing up your credit in no time.
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