What’s a Thin Credit File?

“John, I applied for a credit card and I was turned down because of a “thin” credit report.  What in the world is a thin credit report?”

This is another terminology used by the credit reporting industry that you may not be aware of.  Thin and thick credit reports refer to the number of accounts in the credit report, so don’t put too much thought into the phrase because it actually means exactly what it sounds like…thick versus thin..  Those with very little credit history have a thin report and those with longer history have thicker reports.

Credit scores are developed to have special treatment for these two types of credit reports; otherwise, anyone with a thin report would have a low score compared to those with many accounts.  You would be at a disadvantage if you haven’t had credit for a long time.

Thin report

Generally speaking, a thin credit report has three or fewer accounts and usually belongs to those new to credit, such as young adults, immigrants, students, widows, divorcees or those who are new to the work force.  This individual is trying to get credit established, which is a challenge for anyone just starting out. The first account is usually a credit card, secured credit card, or as an authorized user on someone else’s account, or perhaps a student loan.

Thick report

Generally speaking, a thick credit report has four or more accounts therefore are more established credit history.  There is usually a mix of account types such as installment (mortgage, auto and student loans) and revolving (credit cards, retail cards and oil cards).

In order for you to be able to receive a credit score, there has to be enough information in which to evaluate you.  The minimum requirement is at least one current account that has been updated recently and does not belong to someone that is deceased.  This definition differs from across different scoring models.

Credit scores

For the most current version of FICO, FICO 8, at least one account must have activity in the last six months and is at least six months old in order to be scored.

For the most current version of VantageScore, VantageScore 3.0, a credit file is scored with at least one month of credit history and the account has to have been updated at least once in the last 24 months.