A thin file refers to an individual with little to no credit or financial history on record. Thin files make it difficult for traditional verification and scoring systems to assess a person's risk profile. Typical thin file users are young adults, recent immigrants, people who use cash for most transactions, and those who were previously unbanked. Instead of conventional credit checks, which have little information on thin file users, institutions must seek novel methods and alternative data sources to serve these populations while still managing risk.
Use case/ examples for thin file
Alternative data verification: Assessing the identity and creditworthiness of thin file consumers using alternative available data sources that include utility payment history, rental records, or bank transaction patterns when traditional credit bureau data is insufficient.
Financial inclusion: Extending banking and credit services to underserved populations with thin files by utilizing digital identity verification methods that establish customer identity without relying solely on credit history from the major bureaus.
Risk assessment: Evaluating thin file applicants through the use of document verification, biometric authentication, and behavioral analysis to establish identity confidence and assess risk without traditional credit data.