What Is the Lowest Credit Score?

Well, that’s an easy question. The lowest credit score is 300. And that number applies to both FICO credit scores and VantageScore credit scores. 

In other words, both the companies behind the most widely used scoring technologies set the same minimum of 300. (Likewise, the  maximum credit score produced by both companies is 850.) FICO, the bigger of the two main credit-scoring companies, says: “90% of top lenders use FICO Scores to help them make billions of credit-related decisions every year.”

Can You Have a Score Under 300?

Actually, it is possible to have a sub-300 score in a handful of specific situations. That’s because FICO builds industry-specific scoring systems for certain types of lenders: lenders offering auto loans, credit cards, and mortgages can choose to use software that’s been tweaked to address their needs.

When dealing with the aforementioned types of lenders, borrowers can have industry-specific scores that range from 250 to 900. However, your mainstream, non-specialist, credit score can still only run between 300 and 850. 

You likely have many scores

It’s worth noting that we each have several—often dozens of—credit scores. You’ll have two, of course: one each from FICO and VantageScore. But each company regularly brings out new versions of its systems, and not all lenders upgrade immediately to those new scoring systems

So, for example, one lender might still be using the (more antiquated) “FICO Score 3”, while another has upgraded to the recently released “FICO Score 10”. And other lenders might still use versions 4-9. Each might give you a slightly different number.

Meanwhile, not every lender reports every account to all three of the big credit bureaus (Equifax, Experian, and TransUnion). So, these bureaus may not all have the same information about you.

This means one lender might tell you your score is x, another might say it is y, and your credit score app might say z. The good news is that the things that you do to improve, or worsen, your credit will have similar effects on all your scores. So, it’s better instead to focus on driving all of your scores higher, rather than worry about why your score might be slightly higher or lower, depending on which lender you ask.

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Why Is Your Credit Score So Low?

Your credit score is just a three-digit representation of the information on your credit report. Sophisticated algorithms created by FICO or VantageScore crawl over your credit report, adding points when you do good things (such as paying bills on time and keeping your credit card balances low) and deducting points when you do the opposite.

If your credit score is low, it’s likely to be low for one of two reasons:

1. You’ve had issues in your credit history that may not be your fault, but which mean you’ve made late payments, run up your card balances, or applied for too much new credit too quickly. A really low score may mean you’ve had a recent bankruptcy, foreclosure, or court judgment against you.

2. You have a “thin file” because you haven’t borrowed enough. Scores assess how good you are at managing debt and paying it back in a timely way. If you’ve never had much (or any) debt to manage, your score can’t make that assessment until you have such experience.

Whatever the reason your score is lower than you’d like, you can be sure there are ways to build or rebuild it. Of course, it will take time. But if you’re determined and patient, you, too, could have a credit score to be proud of. (You’ll find ways to improve your credit later in this article.) 

Why Does It Matter if You Have a Low Credit Score?

Having a low credit score matters only if you want to borrow money. Some people pay off all their debts when they retire and have no borrowing thereafter. Over the following seven years or so, their scores will therefore gradually decline to 300.

That’s fine as long as they never need a loan or credit card. But if they do, they’ll find it hard to get one—no matter how sky-high their score used to be. 

For everyone else, a low score can be a real millstone around their financial necks. FICO has a calculator on one of its websites that lets you estimate the loan savings that higher scores provide over lower ones. The calculator indicates those savings over a range of scores. Below, however, we compare the highest score range with the lowest score range to highlight the differences in borrowing costs.

Potential mortgage savings

Let’s start with mortgages. Our example is a nationwide average interest rate for a $300,000, 30-year, fixed-rate mortgage on the day this article was written:

There’s a lot to unpack there. Someone within that lower score range will pay $323 a month more than someone in the top range. And that adds up to $116,354 more over the 30-year life of the mortgage. Wow!

You may have noticed that the bottom score range is 620-639. That’s a long way from a 300 score. And it is appreciably above the minimum score you need to qualify for a mortgage, which is 580 or, exceptionally, 500. So we’re not looking at worst-case scenarios here, either. 

Potential auto-loan savings

You can use the same calculator to check the potential savings on auto loans that a high credit score can deliver. We chose the nationwide average for a $25,000, 60-month, auto loan:

As the table shows, someone with poor credit could pay $9,156 more in interest over five years for the same car as someone with a good score. That’s more than three times as much!

And it’s not just mortgages and auto loans that penalize borrowers with below-average credit scores. Pretty much every commercial loan does so, too. The bottom line: expect to pay much higher interest rates on credit cards, personal loans, home equity loans, home equity lines of credit, and other sorts of borrowing until you boost your score. (The main exceptions are payday lenders and loan sharks, which charge all of their customers very high interest rates. Such rates should make those lenders the very last resort for desperate borrowers.)

Meanwhile, it’s not just the prospect of facing high interest rates that should bother you. A low score can see you pay significantly more for your car and homeowner’s insurance, as well as for your apartment’s security deposit. 

Ways to Improve Your Credit Score

The first rule when trying to improve your credit score is to always pay every bill on time. Doing this has the single biggest positive impact on your credit score.

The second rule concerns your credit card balances. You need to keep each balance below 10% of that card’s credit limit. This advice may come as a shock. And it may well take you a while to pay your balances down to that level. But it’s probably your quickest route to a higher score. 

In the past, FICO used to recommend keeping each credit card balance below 30% of your credit limit. And VantageScore still does recommend doing that. But FICO has changed its tune recently. The company now says: “Generally, keeping it below 10% (and consistently paying bills on time) can help you build and maintain a good FICO® Score.”