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What do you do when you have a thin credit file?

WisePiggy Editors
  • Credit
  • 7 minute read
What do you do when you have a thin credit file?

College. “The Best Four Years.” Profound academic opportunity mixed with a jam-packed social calendar. Money is tight for students, but most have a part-time job or the love of Mom and Pops to fall back on.

I am entering sophomore year at the University of Michigan. Until this year, I had summer jobs at a camp and as a swim coach, making spare change to get myself through the school year. I was pretty naïve when I started my freshman year and blew through nearly half of my saved earnings within the first semester (disclaimer: part of this is due to my lack of discipline when it comes to purchasing clothing items as well as my coffee elitism, i.e., I can only drink coffee that has been brewed by a barista). Needless to say, I used my mother’s “emergency” Visa for far more than just emergencies, and I got a credit card statement with all of my purchases highlighted mailed to my dorm room as a result. (Sorry, Mom!)


Though my habits improved slightly during second semester, this summer it became clear I needed to shift into high gear to improve my finances as well as restore my parents’ sanity. I got a 9-to-5 job and became eligible for a credit card of my own. First, though, I went to WisePiggy.com to get my free credit score. The credit score is a three-digit number that is based on your credit history and how you have managed credit that has been extended to you. When the number 760 appeared, I thought,”Score! I’m in the green!” But there was a catch…

“Ms. Scheel,

Due to your lack of data, you have a thin file.”

Sweet! I don’t have any problems with my credit score! Thin file means no big stack of “paperwork,” right?

What ‘thin’ means

Wrong. A thin file indicates that a user does not have a credit history long enough to produce an accurate credit score. Due to the fact that I am a) in college and thus b) do not have a full-time job or c) my own credit card or other loans, my file is about as thin as it can get.

FICO scoring chart

After getting over my initial dismay, I realized that thin files are common for individuals like me who are just starting to build a credit history. Although it is sometimes overwhelming to contemplate improving a credit score when you have to worry about grades, graduating and getting a job, I’ve gained some key insights as to why it is essential to be the early bird who nabs the good credit foundation worm.


Establishing good credit in the long run comes from opening accounts and using them properly. The higher your credit score, the lower the interest rate will be on credit cards or loans when you apply for them. I talked to Amber Stubbs, managing editor of CardRatings.com, for advice. College students, recent college grads and thin-file victims can all use these steps:

Get active

In order to build a credit history, you have to start with what you’ve already got. If you have existing accounts open that you have not been using, start using your credit card once per quarter and pay off the balance as soon as it’s due. This is important for two reasons: First, issuers may close accounts that have been inactive for an extended period of time. Even after the account is closed, it will stay on your credit report for up to 10 years. If you have been late paying the closed account, that blemish will stay on your report for seven years and will damage your score until it’s removed. Second, dormant accounts will affect your utilization (the debt-to credit limit ratio on revolving accounts), which makes up 30 percent of your credit score. Ideally, a user’s utilization should be between 1 and 10 percent, but 0 percent utilization could ding your credit score.

Get rid of debt

If you are complaining about debt, you are preaching to the choir: I’m going to have a year of college tuition riding on my shoulders when I graduate. So, if you have any existing debt, as I will, clean it up. Paying off debt is the best way to raise your credit score. Bad debt, such as a collection, will stay on your report for seven years.

Get a card that helps you build credit

Student credit cards, retail credit cards and secured cardsserve a better purpose for thin files than prepaid cards because they allow the user to build a credit history. Prepaid cards are not reported to the credit bureaus.

Student cards are perfect for people like me because they have looser requirements, since a thin file is expected of college students applying for a credit card.

If that option doesn’t float your boat, opening a retail card at one or two stores where you frequently shop is a great option. These cards have no annual fee, but generally have a very high interest rate, so remember that if you don’t pay off the card each month, you’re going to be paying a lot more for that sweater you bought.

Consider a secured card

If you do not qualify for either of these options, fear not! You can always open a secured card. To get a secured credit card, you deposit money (usually around $300) into an account with a bank and that establishes your credit line for the card. Using a secured credit card responsibly – pay on time, in full, don’t run your monthly balance too close to your limit and do not go over your limit – will improve your credit score. And after a year or so, the bank may offer you a regular card.

One tip to keep in mind: Opening too many new accounts in a short period of time also lowers your credit score, so research and choose your card wisely.

Work something out with mom and dad

A final option is to become an authorized user on a parent’s card, as I was on my mother’s card. As an authorized user, you piggyback on your parents’ good credit history and score. Your mother or father will be responsible for any debt you accrue on that card, so be sure you handle it responsibly.

Anyway, I’m pretty confident that if I see potential in one of these options, you will too.

So folks, take it from me, the credit novice turned know-it-all: building up a good credit history is crucial for the longevity of your financial success. With these habits, you will pork up your file to be nearly as plump as a piggy bank.