When a credit report shows "insufficient credit," it means there is not enough credit history or activity to accurately assess an individual's creditworthiness and generate a score. This can happen for several reasons:
This situation doesn't necessarily indicate poor credit but rather that the individual hasn’t used credit extensively enough for the scoring model to assess their creditworthiness.
1. Limited Credit History
The individual has no prior credit history, making it impossible to generate a reliable credit score.
Common for young adults or those who have never used credit cards, loans, or other credit products.
2. Thin Credit File
A "thin credit file" means the individual has very few credit accounts or limited credit activity on their report.
Without enough credit data, the system cannot determine a credit score.
3. New Credit Accounts
TransUnion requires at least 6 months of credit history to generate a score.
If an individual has recently opened accounts but their oldest account is less than 6 months old, their credit report may show "insufficient credit."
4. Inactive Tradelines
Credit accounts that have been inactive or closed for a long time may not contribute to score calculation.
Updated financial behavior ensures that only recent activities impact credit scores, which may result in an 'insufficient score' status if accounts lack recent activity.
Guidance for Next Steps
Understand the Credit History: The applicant or tenant may need to review their own credit history to ensure all tradelines are accurately reported.
Contact the Credit Bureau: For more detailed information about why their credit file is not scored, the applicant can directly contact the credit bureau (e.g., TransUnion) that generated the report. This will help clarify issues such as missing tradelines or reporting errors.
Build Credit History: Applicants with a thin credit file can focus on building their credit history by opening and maintaining credit accounts responsibly over time.
Important Note:
Credit report data is directly provided by credit bureaus, which means third-party applications, including tenant screening services like Stessa, do not have access to additional details beyond what’s shown in the generated report. For specific inquiries, reaching out to the issuing credit bureau is essential.