What’s the Lowest Credit Score You Can Have?

When you apply for a loan or credit card, your credit score is one of the first things lenders look at. It lets them know how likely you are to pay back the loan. You might have trouble getting approved or have to pay more in interest if your score is low. But what is actually the lowest credit score possible?.

I’ll talk about the ranges of scores for FICO and VantageScore, which are the two main credit models. A low credit score is also something I’ll talk about, along with why it’s important and how you might be able to raise it over time.

Scoring Ranges: Lowest to Highest

The most commonly used credit scores in lending decisions are FICO and VantageScore Both scoring models range from 300 to 850

Here’s an overview of the credit tier categories according to Experian

FICO Score Ranges

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Very Poor

VantageScore Ranges

• 781-850: Excellent
• 661-780: Good
• 601-660: Fair
• 300-600: Very Poor

In both cases, the worst credit score you can have is 300. But it’s very uncommon for someone to really have that low of a score.

According to FICO, only 0. 5% of people whose FICO scores are in the “Very Poor” range are consumers. Good (670–739) is the most common score range, making up 24 3% of scorers.

What Leads to a Very Low Credit Score?

There are a few key factors that can seriously damage your credit and potentially bring your scores down near 300:

• Foreclosure: Going through the foreclosure process on your mortgage can demolish your credit. Foreclosures may show up on your credit reports for up to seven years.

• Bankruptcy: Filing for Chapter 7 or Chapter 13 bankruptcy can also trash your credit, especially right after filing. Bankruptcies stay on your credit report for seven to 10 years depending on the chapter.

• Past due accounts: If you have a history of accounts that are 90 days to 120 days past due, it can indicate you are a very high credit risk. Multiple severe delinquencies can tank your scores.

• High utilization: Using a very large percentage of your available credit limits on credit cards and other revolving accounts can hurt your score. Maxing out cards is a warning sign to lenders.

• Limited credit history: If you have no credit accounts or a very thin file, you may not have enough data to generate a credit score at all. Lack of information makes lenders hesitant to approve you.

• Inaccurate information: If your credit reports contain significant errors�like wrong names, incorrect balances or fraudulent accounts�it can bring down your scores. Disputing errors is crucial.

So in most cases, a combination of negative factors like these would have to be present for your credit score to dip near 300. Having just one or two negative items is unlikely to cause such an extremely low score on its own.

Why Your Credit Score Matters

The higher your credit score, the lower risk you look to potential lenders and credit card companies. There are some key reasons why it pays to maintain the best credit you can:

• Loan approval: Many lenders have minimum credit score requirements. The lower your scores, the fewer loans you may qualify for. Those with poor credit (300-579) often can’t get approved.

• Interest rates: The higher your credit score, the lower interest rate lenders are likely to offer you. Having very poor credit scores near 300 will make for some extremely expensive loan terms.

• Down payments: On mortgages, borrowers with lower credit sometimes have to make down payments of up to 20% or more of the home’s value. Those with better credit can put down as little as 3%.

• Deposit requirements: You may get hit with larger security deposits for utilities, cell phone service and rentals if you have bad credit. Landlords often reject applicants with very low scores.

• Insurance costs: In most states, your credit can impact what you pay for auto and homeowners insurance. Poor credit means you represent higher risk to insurers.

• Employment eligibility: While employers can’t see your credit score, some do check your credit report. Very negative items could make you look less responsible.

How to Improve a Low Credit Score

The good news is credit scores are not set in stone. With some time and effort, you may be able to rebuild your credit by:

• Making all loan and credit card payments on time each month
• Paying down credit card balances to reduce your utilization rate
• Bringing any past due accounts current and paying collections
• Limiting new credit applications to avoid too many hard inquiries
• Having inaccurate information removed by disputing errors with credit bureaus
• Becoming an authorized user on someone else’s credit card if possible

Improving very poor credit takes patience, but it is doable. The higher you can get your scores, the more doors will open for you financially.

The Takeaway

While 300 is the lowest credit score possible, it’s rare for someone’s score to actually be that low. Much more often, poor credit falls in the 300-579 range.

Major negative items like foreclosure and bankruptcy can tank your credit, as can a history of missed payments and high balances. But you aren’t necessarily stuck with a low score forever.

Monitoring your credit and utilizing responsible habits over time can help you build your scores back up. The higher your credit score, the more affordable borrowing will be.