Thin credit file? Tips to bulk up those numbers

By Andy Webb

Bigger is better right? Well that's definitely true when it comes to your credit file!

I like my bread sliced into thick, big doorstep style wedges. It’s great mobiles are no longer the size of bricks, but I don’t want one so delicate it snaps. But nothing beats the disappointment and frustration the impact of thin credit file can have.
It’s likely a thin credit file will make it difficult for you to open bank accounts, get a credit card, apply for a mortgage - or even just take out a mobile phone contract. And the people most likely to suffer from a thin credit file are those in their late teens and twenties.

What is a thin credit file?

A credit file forms the basis of a credit score - and a thin credit file is basically one with not much in it, if anything at all. Literally a thin file. Ok, so it’s digital, but if they printed out all the info they have on you, it would make a thin file.

And that’s bad. There might not be anything negative in the file, but having very little could be just as harmful as a stack of missed payments.

Why it’s useful to have a fat credit file

Before any financial companies decide whether they’ll lend you money, they want to know a little about you. First, they want to check you are who you say you are. Second, they want to work out if you’re going to be a risk - will you be able to pay them back (and will they make any money from you).

If you don’t have a credit file, or only have a few bits on there, it makes both those decisions harder. Seeing as they don’t need to lend you money, it’s often just easier for them to reject your application. That means no loan, no new phone, and possibly even no new flat. Lenders know a fair deal about your financial affairs. So getting clued up on exactly what information they do and don't have would let your mind at ease, here's a in depth article about this.

Who has a thin credit file?

It’s young people most likely to have a thin file. The reason? There’s going to be little evidence of your relationship with money.

You’ve not been able to borrow money or have an overdraft. It’s only at 18 years-old that you can get a credit card, and you’ve probably never had many bills in your name. Even if you have some of these, it takes time for a credit history to build up.

But it’s not just under 25's who might struggle. If you’ve always managed to get by just using cash and debit cards, or lived at your parents for a long time, there’s going to be less information on you. Your granny might even have a limited credit history if she didn’t have her name on the bills or never owned a credit card.

There’s also a chance your file is thin because some of the information held about you is wrong or incomplete. In these instances the credit reference companies might not realise you are “you”, instead splitting your details over multiple versions.

How to build your credit footprint

First up, register to vote. Doing this proves your address - just make sure you keep it up to date when you move. While you’re doing this, check your address history is consistent on your credit file. Gaps are bad news.

Next apply for a credit card, and there are some designed to help people build up their credit score. If you’re worried about having one, don’t take it with you on a night out or when you’re shopping. Instead only use it once or twice and pay it off in full every month - missed payments could do the opposite and damage your rating. There are a handful of cards and companies that claim to rebuild your credit history, and eventually improve your credit rating. You can get pre-approved for cards by using online tools such as giffgaff’s credit card comparison or Moneysupermarket's 'smart search'. Want to know more about the benefits of credit rebuilding products? Read this nifty article.

You should also pay for bills by Direct Debit as more utility companies are providing credit reference agencies with evidence that you can make payments on time each month. It’s worth checking out Credit Ladder too, which uses your rent payments to build your history.

It’s also good to stick with your bank for a bit, even if you’re tempted by special switching offers. The longer you stay with the same company, the more signals you give that you’re stable.

Top takeaway

In some ways a thin credit file is just as bad as having poor credit history. If you want to know more about how to fix this, read this. Lenders may still be reluctant to give you credit if they have no record of what you’re like at paying it back. But fear not, if you do have a thin credit file, as shown above you have a number of ways to help build up your credit history so when you come to apply for a really important piece of credit like a mortgage, you will give your best chance of being accepted.


By Andy Webb

Andy is the money blogger behind Be Clever With Your Cash, as well as the editor of blogging network UK Money Bloggers. He's passionate about helping people get the most from their money, and a little bit addicted to yellow reduced stickers in supermarkets. You might also have seen Andy on TV talking about money matters as he's one of the money experts on BBC One's Right on the Money.

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