Every industry has its own unique terminology and the credit industry is no exception. One of the common terms used to describe credit reports is “thin,” which is a description of the amount of information housed by the report. What is a thin credit report, and do you have one?
Just as you would assume thin would mean lean, slim or slender, a thin credit report is lacking in credit history and contains very few accounts. This would represent someone new to credit who does not have much credit in their name. Some examples are: someone new to the work force, students, people new to the U.S, widows, and divorcees.
Credit information is used to assess credit worthiness and a limited credit history with few accounts makes it challenging for lenders to access risk. Credit scores give unique treatment to thin reports and evaluate them as their own group (against their peers), instead of comparing them to thick reports or those with many accounts, years of credit history and mixture of different types of accounts.
Thin credit reports can receive a credit score, but there are certain requirements that have to be met and can differ depending upon the score.
FICO scoring criteria
In order for a credit report to receive a FICO score, the credit report must meet the following criteria:
1. The credit report must have at least one account the has been updated in the past six months. The date used is the date the information was updated on the credit report, which is the “date reported” field.
2. The credit report must have at least one account that has been opened for a minimum of six months. The date to determine this is the “date opened” field on the credit report. The account has to be at least six months old.
3. There is no deceased indicator on the credit report. This can occur if the individual listed on the credit report is deceased, or if the individual shares an account with someone who is deceased.
One account can meet the first two requirements. An account that is 1 year old and has been updated in the past 6 months will qualify the consumer’s file for a FICO score.
VantageScore scoring criteria
A VantageScore credit score can be calculated on a consumer’s credit report as long as there’s an account (more formally referred to as a “trade line”) that has been updated in the past 24 months, based off the date reported. If, however, there is no account information available in that time frame, the newest VantageScore credit score may be able to generate a score based on older data or solely on non-account data such as collection information, public record information and inquiries.
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. You can follow John on Twitter here.