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What is a Thin Credit File and How Does it Impact My Score?


July 18, 2019 ( Newswire) The credit conundrum: You can't get a credit card because you have no credit or "thin" credit, but you can't build your credit without access to a credit card. Sound familiar?

This is a frustration facing a lot of consumers today. They have a thin credit file, which means they have little or no credit history to show would-be lenders that they're not a credit risk.

However, you might be able to break the cycle by trying some of the following tactics to fatten up your credit file.

A Secured Credit Card

You may not be able to get a traditional major credit card, but you might be able to get a secured credit card from these same companies.

A secured credit card essentially looks and functions like an unsecured card. The key difference is you're paying a refundable deposit to secure this card. That deposit acts as your credit limit and you can opt to pay whatever amount you like, from a few hundred to a few thousand dollars.

You can shop with this card in person or online just like any other credit card. More importantly, your payment history and your balance/credit utilization are reported to major credit reporting companies, the same way that your activity on a traditional card would.

An Online Personal Line of Credit

You may not be able to get a line of credit from a major bank with a thin credit file. Some of the biggest banks that offer personal line of credit options want to see thick credit.

However, you may be able to get an offer from non-banks that offer personal line of credit options, such as CreditFresh, by applying online. They're not as stringently regulated as major banks, so they may be an option if the banks turn you down.

Like the secured credit card we mentioned above, the payments and activity on this online personal line of credit may be reported to credit agencies, which could help you build your credit score and your credit history. To see how your payment history may be reported, compare the borrowing options at CreditFresh with other personal lines of credit.

Report Your Rent Payments

If you have an apartment or a rented home, you have a means of positively affecting your credit.

Your rent payments are not going to be automatically reported to credit agencies (fewer than 1% are), even if you're making them on time every month.

However, you can pay a rent reporting service to ensure your payments are being reported and each time you pay your rent, you may build your credit. These companies include Rental Kharma or Rock the Score. They each have their own price structure and may report to different agencies, so do a bit of research to find the one that's right for you.

Become an Authorized User on a Credit Card

You can also get added to a credit card as an authorized user, if you strike an agreement with a friend or family member with more credit history.

The plus side of this is you can build a credit history and have access to your own credit card that has your name on it. You're also not responsible for making the payments, but again you will need an understanding with the primary cardholder.

The downside is this method of credit building may not have as much of an impact as the methods listed above.

The most important thing to remember with any credit activity is that you must stay on top of how much credit you're using and make it a top priority to make payments on time. Otherwise, things may backfire on you.

You're just starting to build your credit history right now, so make sure you're building a good history!

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