I wanted to address a topic that has helped my clients crush it with securing a LOAN while rebuilding their CREDIT – so pay close attention…
Does anyone know what a ‘Thin Credit File’ means?
You may have possibly heard this term from your banker or while searching online for your next loan – so let me break it down (hope it helps!) as it has for our clients, who we’ve help fund over $2M combined for this month alone…
What does it mean when a funding institution denies you for “weak credit” or “thin credit file”?
Basically it means, that you do not have enough credit history to rate, that you do not have enough loans, credit cards, mortgages, or car loans to generate a score high to get any funding.
So when a financial institution pulls your credit and there is not enough history, the credit bureaus send out an alert that you have a “thin file.”
This is not a good thing and could hurt your chances of getting any type of funding that you may be seeking.
So let’s go through the reason why you would have a weak credit history so we can try to solve this problem.
It will not happen overnight, but with dedication and responsibility, one can really build on your credit report.
- Now if you never had credit, meaning you do not have any lines of credit listed on your credit report, like credit cards, loans, etc then it’s impossible for bureaus such as Transunion, Experian, or Equifax to generate a score. We all start off with a 0 score until we start building it up and hopefully one day reach the 850 marks!
How Do you fix this?
What I suggest is that you start building your credit, you can do this a number of ways. You can be a co-signer on a car loan or mortgage for someone who has amazing credit and good income that can help you establish credit.
You can become an authorized user on credit cards and try to establish credit with those cards on your file.
Another step you can do is to apply for a secured card, this can help in tremendous ways, but you do need to be aware of annual fees or other terms.
- The Credit Bureaus think you are deceased! I know this does sound crazy, but it does happen Credit bureaus can mistakenly believe you have passed away, usually happens to jr., suffixes, so when the credit agencies run your file it’s coming up as a “thin file,” because deceased people do not have credit scores.
- How do you fix this?
This is a lengthy process but can be fixed if you put in enough time and effort.
You need to contact all three credit bureaus and notify them of this mistake, you can file disputes that include all your information including social and birthday, and have a written statement saying you are not deceased, you most likely will have to turn documents as well.
- Your credit file is split meaning that you probably have had different names and moved around a lot so your file has been split into different sections.
Some reports will have different information on them as well as different scores so credit unions are getting multiple credit reports at once which leaves them to try to generate their own score based on limited information causing an incorrect thin file error.
- How do you fix this?
Well, you will have to contact the credit bureaus directly letting them know your information is being reported incorrectly and that you need all your reports to merge. Of course, you need to check on your reports before you try to correct it, so you know exactly what needs to be on your credit report and which closed accounts are yours as well. Luckily, this usually happens those that have not yet started building up history, have ever checked on their credit, or tried to take out loans, credit cards, or any type of funding in the past. It’s always great to check up on your credit report periodically, as well to always build on your credit.
Make sure if you do want to have a high credit score that you remember the simple basics of credit building, always have a mixture, and always pay on time!