How to Fix a Thin Credit File

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Last updated on March 1st, 2023

According to Equifax, 91.5 million Americans have no credit history. Even more consumers suffer from the negative impacts of having too little credit – especially younger Americans and senior citizens. Here’s why some applicants struggle to establish credit and get approved for new credit cards.

Reasons Why Some Americans Struggle to Get Credit Cards

The Equal Credit Opportunity Act prohibits creditors, financial institutions, and card issuers from discriminating against applicants based on age, gender, or other factors. Despite that, many Americans are finding it difficult to get approved for a new credit card, including seniors and those in their late teens and early twenties. Here are some reasons why:

Poor Credit Mix

Senior citizens, like people in their early twenties, may find it challenging to get a new credit card due to having a poor credit mix. Lenders prefer to work with borrowers with a robust combination of credit, such as mortgages, auto loans, and credit cards.

These types of loans fall into two categories: installment loans and revolving lines of credit. Revolving credit (like credit cards) does not have a set date for the end of the payment terms. This type of lending also lacks a consistent balance, as the balance due depends on user spending.

Installment loans, on the other hand, have set terms and end dates. Examples of installment loans include auto loans and mortgages.

Like those new to credit, many seniors may lack current installment loans, including a mortgage. This can make it more difficult to receive new credit lines. Fortunately, a long history of on-time payments with existing credit cards can offset this potential shortcoming.

Thin Credit

Like poor credit mix, many seniors may have a “thin” credit file. Since the major credit bureaus (Experian, Equifax, and TransUnion) require regular reporting to update credit reports and credit scores, those who have long since repaid mortgages and other accounts might have little-to-no revolving credit. This, in turn, results in a thin file. Similarly, younger applicants may also lack the depth of credit accounts many lenders seek.

Low Income

Most credit card applications require information about the applicant’s income. Income verification gives lenders the peace of mind that a person has the monthly income to handle their current bills, in addition to any new credit responsibilities.

Because many adults over the age of 65 no longer work, it can be hard to provide the necessary resources for applications. Social security benefits, retirement accounts, and other investments can assist in offering proof of assets – but seniors might still struggle to meet minimum requirements from some lenders.

Young adults may have an easier time proving they have a steady income, but several have lower pay than those in their late twenties and thirties, according to statistics.

How to Increase Your Credit Approval Odds

While over 91 million Americans lack a credit score (either due to never having credit, or having a “thin” credit file), there are simple steps you can take to increase your approval odds for credit cards in the future:

Get a Secured Credit Card

Getting a secured credit card is the easiest way to beef up your credit file. Because secured cards require a security deposit to open (which acts as the credit limit), they are much easier to get than any other type of credit card.

Using a secured card to make small purchases, then paying off those payments on time and in full each month, is an excellent way to quickly build up a positive credit history. This process helps keep your payment history clean and your credit utilization low – the two biggest impactors of a FICO Score. That, in turn, can help you graduate to other types of credit cards in a short time.

Related Article: What Are the Best Secured Cards for Rebuilding Credit?

Become an Authorized User

Becoming an authorized user on another cardholder’s account is another great way to build credit. An authorized user is someone added to a credit card account by the account holder. Authorizing a user gives them access to the line of credit and their own credit card that they can use to make purchases. With on-time payments and responsible credit use, your credit score will benefit from the primary account holder’s credit card use!

Related Article: How to Add an Authorized User to Your Credit Card

About: Cory
Cory Santos

Cory is's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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