Do You Have Insufficient Credit History?

Building credit takes time. And if you’ve only recently started using credit cards or loans, you might run into a message stating you have “insufficient credit history.” This phrase could show up on a lender’s credit report or a report you receive when you download your own credit history online. Yet in either scenario, it might make you feel concerned.

However, insufficient credit history simply means there isn’t enough information on your credit report for a scoring model to determine how you handle borrowed money and calculate a predictive credit score.^[1] It’s not a sign you’ve done anything wrong. Instead, you need more time and credit activity to establish a fuller credit record.

The following guide helps break down a deeper understanding of insufficient credit history and how it could impact your financial life. You’ll also find actionable tips you can use to fix a thin credit file and build stronger credit over time, putting you in a better position to qualify for loans, credit cards, housing, and more—hopefully at competitive interest rates.

What does insufficient credit history mean?

Insufficient credit history is a term credit score developers use to explain that there isn’t enough information on a consumer credit report for a scoring model (like FICO or VantageScore) to accurately assess someone’s creditworthiness. Lenders and credit reporting agencies may also call this situation a thin credit file. In short, insufficient credit history means you don’t have many active or open credit accounts (or enough time managing them). In some cases, it could also mean you’re not eligible for a credit score.^[2]

Credit reporting agencies like Equifax, TransUnion, and Experian create consumer credit files from the information that data furnishers (e.g., lenders, credit card issuers, and other creditors) voluntarily provide. If few or no accounts appear on your credit report, a credit bureau may have data that’s too limited for a credit scoring model to calculate a credit score.

People often find themselves with limited credit history or no credit when they’re just starting out financially. Examples may include college students, recent graduates, or anyone who’s mainly used cash or debit cards to manage their finances. Immigrants and older adults re-entering the credit system after years without borrowing are also examples of people who might encounter challenges from insufficient credit history or no credit. Whatever the reason, the result is the same. With limited credit, lenders can’t evaluate your risk, and approvals become more difficult.

Minimum requirements for a credit score

A credit report needs to meet at least the following criteria to generate a FICO® Score.

One (or more) account must appear on your credit report.
One (or more) account on your credit report must be open for six months or longer.
There can be no notation of “deceased” on your credit report.

Either a single account or multiple accounts can satisfy the minimum scoring requirements to generate a FICO Score.^[3]

With VantageScore, by comparison, it’s possible to become eligible for a credit score much sooner. VantageScore 4.0, the newest scoring model available, provides consumers the chance to get a score with just one month of credit history—including traditional accounts, rent, utility, and cell phone accounts.^[4]

That said, it’s important to point out that lenders currently use FICO Scores in 90% of lending decisions.^[5] So, if you have insufficient credit history, it’s important to be realistic about how it could impact future financing opportunities and look for ways to improve the situation.

Ways insufficient credit history can impact your financial life

A thin or insufficient credit file doesn’t just affect your credit score. This type of credit challenge has the potential to ripple through many different financial decisions, costing you money and limiting your opportunities along the way.

Limited or no credit score

If your credit report doesn’t have enough data to generate a FICO Score, lenders can’t rely on the most widely used measure of credit risk when you apply for new financing. That leaves them in the dark when it comes to risk assessment.

Even if you have a credit score, with limited credit history, it may be lower thanks to credit score factors like length of credit history, credit mix, and others. When lenders can’t see a lengthy track record of on-time payment history and a good credit score, qualifying for new financing may be a challenge.

Difficulty qualifying for loans or credit cards

Lenders use your credit reports and credit scores to decide whether to approve you when you apply for new financing such as loans, credit cards, auto loans, and mortgages. Your credit information also helps lenders determine what terms to offer you, including interest rates and fees. With insufficient credit history, you may struggle to qualify for financing.

If you manage to qualify for loans or credit cards, the cost of borrowing tends to be higher. Interest rates and annual fees often climb because you represent an “unknown” risk to the lender. In many cases, you may need to seek alternative financing solutions, like secured credit cards or loans or you might need to provide a co-signer with good credit to help strengthen your application.

Be sure to review the rates and terms lenders offer you, and shop around before accepting loan offers as well. Higher interest rates can add up over time, often to the tune of hundreds or thousands of dollars.

Limited housing options

Landlords often check credit before they’ll approve a new lease application. If your credit file is thin or nonexistent, you might need a larger security deposit, proof of higher income, or even a co-signer to secure a new apartment.

Mortgage lenders may impose similar requirements on borrowers who apply for home loans. Although it isn’t impossible to buy a home with no credit or even to buy a home with bad credit, it can certainly be a challenge.

Insufficient credit history might delay or sometimes stop a mortgage approval outright. If you’re able to qualify for a home loan with these types of credit challenges, you’ll often face a higher interest rate than you’d pay if you had good credit.^[6]

Higher insurance premiums

In most states, insurance companies use credit-based insurance scores to help set premiums for auto and homeowner’s insurance policies. Having no credit or a limited credit history could make that score less predictable.^[7]

Some insurance companies might charge more to offset the uncertainty of insufficient credit history. Others could even opt to decline coverage altogether. But keep in mind that seven states prohibit or restrict the use of credit-based insurance scores, including California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, and Utah.^[8] It’s important to check the latest guidance from your state, as this information can change.

Extra deposits for utilities and cell phone plans

Credit checks often are a requirement in situations people don’t expect, like when you sign up for a cell phone plan or open a new utility account. With limited or no credit, you might have to pay an upfront deposit to activate new service or finance a mobile phone. While these deposits are usually refundable, they can tie up cash (without earning you any interest) that you could use elsewhere.

Tips for getting a loan with insufficient credit history

Even if you have limited credit history, some lenders may still be willing to work with you. Focus on financing options designed for new borrowers or people rebuilding their credit. The following tips may also be helpful.

• Apply for a secured credit card. These types of credit cards require a refundable security deposit that’s typically equal to the credit limit on your account. Many secured credit cards also report to one or more of the major credit bureaus (but be sure to verify), so they may have credit-building potential if you manage them responsibly. Handle your account with care and a secured card may help open the door to traditional unsecured cards down the road.
• Try a credit builder loan. Credit builder loans, like those offered through Self, have the potential to help you establish credit while building savings at the same time. You make fixed monthly payments and at the completion of your loan term, you’ll receive your loan proceeds minus interest and any applicable fees. On-time payments may strengthen your credit history over time—provided the lender reports the account to the major credit bureaus, as Self does.
• Consider alternative data lenders. Some online lenders use alternative data alongside traditional credit information to assess creditworthiness in different ways. These alternative scoring models may consider non-traditional sources, like rent or utility payment history, when calculating an applicant’s risk.^[9] Applying for a loan with a lender that uses alternative data doesn’t guarantee an approval, but it could open the door to additional financing opportunities in certain situations.
• Use a co-signer or authorized user option. Adding a family member or friend with good credit as a co-signer could strengthen your financing application. But keep in mind that the co-signer will be equally responsible for the debt, and the new account will typically appear on their credit report too.^[10] Alternatively, you could ask a friend or family member to add you as an authorized user on their existing credit card. This strategy may provide credit-building benefits (if the primary account holder manages their account responsibly). Plus, if you have charging privileges, you can enjoy the convenience of using the card as well.

How to fix insufficient credit history

Building a strong credit profile typically takes time. But consistent effort can transform a thin file into a robust credit history if you understand the right steps to take.

1. Open accounts that report to all three credit bureaus

It’s important to have a positive credit history that the credit bureaus can track. To build credit, start with at least one account that reports to all three credit reporting agencies—Equifax, TransUnion, and Experian. As a credit newcomer, you may want to consider applying for options like a secured credit card, a credit builder loan, or credit card offers for no credit.

2. Manage new accounts responsibly

Credit scoring models consider several details when calculating your credit score, especially when it comes to how you manage the accounts on your credit report. Payment history is worth 35% of your FICO Score.^[11] So, on-time payments are essential when you open new accounts. (TIp: Automatic payments drafts can be a helpful tool when you’re trying to avoid accidental late payments.)

The debt you owe, specifically credit utilization (the relationship between your credit card limits and balances), is also very influential where your credit score is concerned. The “amounts owed” category of your credit report is worth 30% of your FICO Score.^[12] As a rule of thumb, a lower credit utilization ratio is better for your credit score.

3. Use rent and utility reporting services

If you’re already paying rent or utilities on time each month, you can put those payments to work for you. These types of accounts don’t typically show up on your credit report, unless you stop paying them as agreed.^[13] However, services like Self’s Rent & Bill Reporting can help you proactively add positive payment data to your credit file. Over time, these small steps can help build a thicker, healthier credit profile.

4. Monitor your credit reports

Checking your three credit reports on a regular basis is important to make sure they contain accurate information. You can visit AnnualCreditReport.com once a week to download free copies of your credit reports from Equifax, TransUnion, and Experian.

If you review your credit reports and find errors, evidence of fraud, or signs of identity theft, you can dispute those issues with the appropriate credit bureau.^[14] Disputing errors right away can help ensure your progress doesn’t get set back by mistakes or inaccurate information.

Bottom line

An insufficient credit history doesn’t have to be a permanent situation. Instead, think of it as simply a starting point. By opening the right credit accounts, consistently paying on time, and making sure your good habits are visible to all three credit bureaus, you can start to establish the good credit history you need to qualify for loans, credit cards, housing, and better interest rates.

As your credit profile grows, make it a habit to keep close tabs on your credit reports and regularly track your progress with all three credit bureaus. The early stages of credit building often bring changes (like new accounts showing up or frequent credit score changes). The good news is that those small wins can add up to meaningful progress over time if you remain consistent.

Sources

1. ConsumerFinance.gov. “Technical correction and update to the CFPB’s credit invisibles estimate.” https://files.consumerfinance.gov/f/documents/cfpb_update-credit-invisibles-estimate_2025-06.pdf
2. Experian.com. “What Is a Thin Credit File?” https://www.experian.com/blogs/ask-experian/what-is-a-thin-credit-file-and-how-will-it-impact-your-life/
3. myFICO.com. “What are the minimum requirements for a FICO® Score?” https://www.myfico.com/credit-education/faq/scores/fico-score-requirements
4. VantageScore.com. “VantageScore 4.0 Makes Homeownership Easier for Millions With Limited Credit History, According to Forbes.” https://vantagescore.com/resources/knowledge-center/homeownership-just-got-easier-for-millions-with-limited-credit-history-thanks-to-vantagescore-4-0-vantagescore-in-forbes#:~:text=How%20Does%20VantageScore%20Help%20Buyers,visit%20VantageScore's%20Mortgage%20landing%20page
5. FICO.com. “Basic Facts About FICO® Scores.” https://www.fico.com/en/latest-thinking/fact-sheet/basic-facts-about-fico-scores
6. RocketMortgage.com. “Can you buy a house with no credit? Tips and loan options or those with no credit score.” https://www.rocketmortgage.com/learn/can-you-buy-a-house-with-no-credit
7. Insurance.Ohio.gov. “What Is a Credit-Based Insurance Score?” https://insurance.ohio.gov/consumers/homeowner/credit-score#:~:text=No%20Credit%20History,to%20calculate%20an%20insurance%20score
8. Experian.com. “Which States Restrict the Use of Credit Scores In Determining Insurance Rates?” https://www.experian.com/blogs/ask-experian/which-states-prohibit-or-restrict-the-use-of-credit-based-insurance-scores/
9. Plaid.com. “6 types of alternative credit data for better loan decisions.” https://plaid.com/resources/lending/alternative-credit-data/
10. Experian.com. “What to Do If You Cosign for Someone and They Default.” https://www.experian.com/blogs/ask-experian/what-to-do-if-you-cosign-and-someone-defaults/
11. myFICO.com. “What Is Payment History?” https://www.myfico.com/credit-education/credit-scores/payment-history
12. myFICO.com. “What Is Amounts Owed?” https://www.myfico.com/credit-education/credit-scores/amount-of-debt
13. Chase.com. “Does paying monthly bills build your credit history?” https://www.chase.com/personal/credit-cards/education/build-credit/does-paying-monthly-bills-build-credit-history
14. ConsumerFinance.gov. “How do I dispute an error on my credit report?” https://www.consumerfinance.gov/ask-cfpb/how-do-i-dispute-an-error-on-my-credit-report-en-314/

About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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