Credit Building > What to do if you have a thin credit file?

What to do if you have a thin credit file?

Wollit Team3 minute read · Updated 23rd July 2024

Having a thin credit file in the UK can make it difficult to get the financial products and services that you need, from loans and mortgages to even basic things like mobile phone contracts or current bank accounts.

However, there are things you can do to build up your credit history and improve your situation. Here is what it means to have a thin credit file, why you might have one, and what you can do to make yourself more “visible” to lenders.

What is a thin credit file?

A thin credit file means a credit report that lacks sufficient information for credit reference agencies (Experian, Equifax, and TransUnion) to generate a reliable credit score.

This usually means you have very few, if any, credit accounts listed on your report, such as credit cards, loans, or mortgages.

Why do I have a thin credit file?

There are several reasons why you might have a thin credit file:

No credit history. If you've never had credit products before, such as mobile phone contracts, credit cards, or loans, you won't have a credit history to build a credit file from.
New to credit. If you're new to using credit (for example you just turned 18), it takes some time to establish a credit history. Your credit file will be thin until you've had credit accounts open for a while so that the credit reference agencies can see how reliable you are at making payments.
New to the UK. If you've recently moved to the UK from another country, keep in mind that your credit history from abroad may not transfer, leaving you with a thin UK credit file.
Infrequent credit use. Even if you have some credit accounts, if you don't use them frequently or have long periods of inactivity, your credit file may still be considered thin.
Mistaken for deceased. In some rare cases, credit reference agencies may actually mistakenly believe you have passed away, resulting in a thin or non-existent credit file. This can happen if you have the same name as an older relative who used to live at the same address, for example.

What happens if I have a thin credit file?

Having a thin credit file can have pretty big consequences. Lenders use credit reports to figure out how risky lending to you is, and a thin file can make you appear high-risk, even if you have a good financial history.

Here is what you can expect:

Unreliable credit score. You can actually have a good or even excellent credit score with a thin credit file. Usually this happens if you only had a mobile phone contract or another small credit product and nothing else. You made your payments on time and your credit score is good but you can still get rejected – lenders want to see more.
If approved, you may face higher interest rates or less favourable terms compared to those with more established credit histories.
Some companies, such as utility providers or mobile phone companies, use credit checks for identity verification. A thin credit file can make it difficult to prove your identity, leading to problems getting a contract.

How can I check if I have a thin credit file?

To check if you have a thin credit file in the UK, here is what you need to do:

Get a copy of your credit report from Equifax, ClearScore, or Credit Karma. You can even get a copy from each one – they might have slightly different information. This will allow you to see what is included in your credit file.
Look for signs of a thin credit file, like very few credit accounts or long periods of inactivity.
Check the recommendations from these credit monitoring services – depending on which one you use and if you’re on a free or paid plan, they might tell you what is dragging your credit score down.

How can I build a stronger credit file?

While having a thin file can be challenging, there are several steps you can take to build up your credit file and improve your situation:

Register to vote. This helps verify your identity and address, and it can both boost your credit score and enrich your credit file. You should register to vote even if you don’t plan on voting yet.
Update your electoral registration every time you move. This will help the credit reference agencies match you with the correct data.
Open a bank account.
Make sure that household bills are in your name. Having utility bills, such as energy, water, and broadband, registered in your name can help build your credit history.
Sign up for a monthly mobile phone contract and make payments on time. This is a credit agreement and can also contribute to your credit file.
Consider signing up for a credit-building card or, even better, downloading a credit-building app like Wollit.

Building your credit history with a credit card requires you to first buy things on debt and then repay them as soon as possible. With Wollit, you only need to pay a fixed monthly subscription. Wollit then reports this subscription as a loan repayment to the credit reference agencies.

This directly builds your credit history and improves your credit score – while keeping you safe from high APR charges, maxed-out credit limits, or the risk of more debt.

In time, this will help you improve your credit score so you won’t need to be worried about any credit check ever again.