Thin File

What is a lightweight file?

A “thin file” refers to the credit report of a person with little or no credit history. Consumers who are just starting out and who may never have taken out a loan or had a credit card are said to have light files.

Key points to remember

  • A person with little or no credit history is said to have a thin file.
  • Having a thin file can make it difficult to borrow money or get a regular credit card.
  • One way to build a credit history is to get a secure credit card and make payments on time.

Understand a lightweight file

Credit bureaus compile data on consumers’ credit usage to generate a credit report on them. This credit report, which includes information on how much the person borrowed and whether they paid their bills on time, is used to calculate their credit score and may be reviewed by potential lenders to determine their creditworthiness.

Having a thin record can make it difficult to get credit or get approved for a loan, because it gives lenders very little information to judge a person’s creditworthiness. To get around this problem, some lenders will consider other information to make their decisions.

How to create a credit with a lightweight file

If you have a slim record and want to borrow money, then you have many choices. The easiest, because it’s based on steps you’ve already taken, is to ask the lender to consider payments that aren’t typically reported to credit bureaus, such as utility bills and rent. If you apply for a home loan, for example, Fannie Mae says lenders can construct a non-traditional loan credit history for you, using a combination of your Bank statements, canceled checksinvoices marked as paid and letters of recommendation from creditors and owners.

Another option that takes more time and effort is to get a credit card and start building a strong credit history. If you have no credit history, the only type of card available to you may be a secure credit card. A secured credit card requires you to deposit an amount of money with the lender which will then act as a line of credit, the maximum amount you can charge the card.

Make sure you get a secure credit card that will report your payments to the three major credit bureaus: Equifax, Experian, and TransUnion. Also, remember to pay your bills on time. Otherwise, you will build up a bad credit history. Finally, find a secure card with low or no annual fees.

After you’ve used a secured card for a while and your credit history isn’t as bad, you may be eligible to apply for a conventional credit card.

By then, you will likely have established a credit score as well. According to Experian, “accounts generally need to be a minimum of three months old and possibly up to six months old before they can be used to calculate a credit score.”