How can you thicken your thin credit file

If there’s not enough information on your credit report or you have a “thin” credit file, it can be a roadblock to accessing credit because lenders are unable to determine your creditworthiness. Consumers with thin files can sometimes feel like they’re dealing with a paradox: they need to get access to credit to thicken their thin files, but because their files are thin, they can’t get access to credit.

There are several ways consumers with thin credit files can build up their credit histories. To beef up a credit file, you must establish a new credit account that is reported to one of the three credit bureaus: Equifax, TransUnion, and Experian. Once you have added one applicable credit account and demonstrate a positive track record of paying it off, you are more likely able to access more credit and continue building your credit file.

The steps below can help thicken a thin credit file.

Benefit from someone else’s credit history

Becoming an authorized user on someone else’s credit card account may help you establish credit.

Only a primary account holder’s credit history and scores are considered when the bank issues the card. However, an authorized user can make purchases on the account and receives a card in their name.

While the primary cardholder has full responsibility for the account, including the ability to make changes, the history of the credit account is reported to the credit reports of both the primary cardholder and the authorized user. This allows the authorized user to build credit (provided payments are made on time). If the account becomes delinquent, both users will receive derogatory marks on their credit reports.

If you are added as an authorized user on an account, you should make sure that you have a good relationship with the primary cardholder and that you have clearly established ground rules and communication for using the account.

Don’t apply for too much credit at once

If you have a thin file, it can be tempting to apply for a bunch of new accounts to accelerate your credit build up. Don’t do it—applying for too many accounts can hurt your credit scores and set you back further.

Lenders may get the impression that you are not good at managing credit if there are too many new accounts in a short period of time. Be selective in which accounts you apply for and start slow.

Check your credit reports

When you embark on your credit journey, you should also make sure that the information being reported to the credit agencies is correct. Make a habit of checking your credit reports from each of the three credit bureaus.

Look for any inaccuracies or discrepancies, and make sure your new credit is being reported correctly. If there are any problems, you should initiate a dispute with the credit bureau.

For more information on understanding and improving credit, see the following articles: