Smart SpendingSmart Spending

The absolute worst credit score

It's really difficult to earn the worst possible FICO score, requiring a perfect storm of bad luck and bad decisions.

By Karen Datko Oct 14, 2011 4:07PM

You've probably read about those overachievers whose goal is to have an 850 FICO credit score -- a feat that's very difficult. Only about 1 million Americans have the so-called "perfect" score.

 

Most people inhabit the 600-800 range, with the median FICO score being 723. About one in four have credit scores below the 600 mark.

 

Congrats to the 850 score folks. But what about the other absolute end of the scale? What does it take to bottom out at 300, the lowest possible FICO score you can have? Does anyone really have a credit score that bad?

 

Case in point: One guy we know bounced checks and let credit card accounts linger unpaid for months at a time and still came in with a credit score in the low 600s (or so he said) -- high enough to score a new-car loan, although with a high interest rate.

 

So, what does it take? According to MainStreet, you have to screw up in each and every one of the five criteria FICO uses to calculate your scores: payment history, how much you owe, length of your credit history, new credit you've applied for, and types of credit you've used, like mortages, car loans and credit cards. (Go ahead. Estimate your credit score for free.)

 

Jeanine Skowronski of MainStreet wrote:

In order to receive a 300, you would have to a find a way to bottom out in each category. This means, as (FICO spokesman Barry) Paperno explains, you would need to open up a bunch of new credit cards, max them out almost immediately, file for bankruptcy the very next day and then head back out and apply for more credit cards.  

You'd also need a very brief credit history, she says, and only one type of loan -- say, just credit cards but no house or car loans.

 

Thus, very few have hit rock bottom. Bankrate offered this breakdown of FICO credit scores in 2006, the most recent year we could find:

  • 300-499 -- 2% of the population.
  • 500-549 -- 5%.
  • 550-599 -- 8%.
  • 600-649 --12%.
  • 650-699 -- 15%.
  • 700-749 -- 18%.
  • 750-799 -- 27%.
  • Over 800 -- 13%.

Of course, there are people who have no credit score. However, based on FICO's website, the bar for qualifying seems pretty low:

For your three FICO scores to be calculated, each of your three credit reports must contain at least one account which has been open for at least six months. In addition, each report must contain at least one account that has been updated in the past six months. This ensures that there is enough information -- and enough recent information -- in your report on which to base a FICO score on each report.

Why do you want a good to excellent FICO credit score? FICO scores from the three major credit bureaus -- Experian, Equifax and TransUnion -- are the most widely used by banks and other lenders when they decide whether to make you a loan and what the interest rate will be. (Another myFICO page shows interest rates you can expect on a variety of loans if your score falls within 620 and 850.)

 

Your scores also can affect insurance rates, and how you're perceived by landlords, utility companies and potential employers. Post continues after video.

Despite their importance, a new Visa survey shows widespread confusion about what's used to calculate your scores. Contrary to what people think, "FICO scores do not include factors such as age, national origin, gender, race, religion, education level, or marital status," Visa said in a press release.

 

(However, economic conditions where you live could impact your personal finances, which in turn could affect your scores. For instance, a new analysis by Experian based on the VantageScore (a range of 501 to 990) showed that Las Vegas and Bakersfield, Calif., -- both hard hit by the housing collapse -- are among the cities with the lowest average scores. The national average VantageScore is 749, USA Today says.)

 

What should be clear is that having a very poor score closes doors to you. For example:

  • "Typically, lenders won't extend credit to a consumer with a poor credit score" or if they do, the interest rates could be prohibitive, the Credit Karma Blog says. "The good news is it's easier for poor credit consumers to improve their credit scores than those with higher credit scores, so each positive action you take will have big benefits." (See: "Money disaster? Fix your credit now.")
  • Below 500, you can't qualify for an FHA-insured mortgage.
  • With a 400 credit score, says CarsDirect.com, "it isn't possible to buy a new car, and sometimes even in the used car category you have to compromise on the kind of car you want."
  • You can apply for credit cards designed for people with poor credit, but watch out for high rates and fees. Try a secured credit card, which requires you to deposit money as collateral. Managed responsibly, it will help you build your credit scores.

Having the lowest possible score could also subject you to ridicule, if others find out. A post by "TheNewWorldMan" at a myFICO forum several years ago had this to say about the lowest credit scores:

Terrible (below 479) (maroon) (rank: leper)
Your FICO sucks. You must have worked hard to get such lousy credit. Have you ever paid anything on time? Your luck is beyond bad. If you entered into a bet involving a coin toss, and were guaranteed five times your original stake for heads or tails, the coin would land on edge and stay there.

More on MSN.com:

20Comments
Oct 14, 2011 6:00PM
avatar
I came looking for the guy with the lowest score ever... I've been duped.
Oct 15, 2011 10:47AM
avatar
How about an article where consumers can score their banks?  It wasn't that long ago when bad decisions meant banks couldn't pay their obligations and we bailed them out.  Now look at how they treat us.
Oct 14, 2011 6:14PM
avatar
The entire Scoring system is just a BANK created penal system that forces Americans to bend to the Banks will, in other words, when the Bank decides to screw you, YOU ARE SCREWED !  All this is courtesy of our Wonderful "Bought and Paid" for US CONGRESS, pure W  h  ores.......  Banks are liars and thieves and BOA is the worst !!!!!
Oct 15, 2011 10:32AM
avatar
  Credit scores are just another con, They are really there to maximize insurance premiums and interest rates. Even "good" spending habits can penalize you if they cut into the banks maximum profit margins.
Nov 2, 2011 4:27PM
avatar
I totally agree with "Someone" and huh1000...this system of "credit" in America is a freakin scam. One indicator of this is the fact that you can't just look at your score and report whenever you want to. I mean seriously, it is MY credit score and MY info on there...I should be able to view it any day, any time, and dispute items that don't belong to me. They make it some nebulous "thing" that you can request a copy of once a year, and most sites require you to pay or sign up for some BS monitoring deal to see your score. Credit and insurance are two of the biggest frauds ever perpetrated on the American people.
Oct 16, 2011 12:58AM
avatar
funny, I own a house and have been paying for 6 years and was late only once, have 4 credit cards for between 3-5 years and have been on time, have had 2 car loans spanning 6 years never late, never missed a payment.  BUT have had 4 medicals (disputed)  and 1 charge off for $66.36 (fingerhut)  and my score is well below 600.  the scoring system is bullsh**.  no wonder poorer people cant get credit... oh wait... maybe if gougers like h&r block properly report  what loans are paid in full to the credit bureaus and furniture rental companies (rent a center etc ) that charge 615% interest report to the bureaus and wait...also the loan sharks that give the poor the payday loans at 1,200% interest then WOW maybe they can get the credit they deserve!!

refund anticipation loans  from  tax preparers are LOANS and should be reported as such!
Oct 17, 2011 4:08PM
avatar

"In order to receive a 300, you would have to a find a way to bottom out in each category. This means, as (FICO spokesman Barry) Paperno explains, you would need to open up a bunch of new credit cards, max them out almost immediately, file for bankruptcy the very next day and then head back out and apply for more credit cards. "

 

I know a good plan when I see one!

Oct 17, 2011 11:36AM
avatar

I agree with Smeado. I thought this was going to be a profile of people with horribly low scores and how they got there, but maybe not using their real names. Either that, or someone who intentionally tried to get the lowest credit score possible as a blog project or something.

 

There must be a lot of bankers reading these comments because I am seeing a lot of thumbs-down votes on people who are making negative (i.e., honest) comments about banks. Touched a nerve, there, eh?

Nov 4, 2011 5:58PM
avatar
I found a way to beat the credit scoring game many years ago. Very simple. I pay cash for everything. Normally, I get it much cheaper that way.
Nov 4, 2011 8:10PM
avatar

The banks and the credxit mongers have duped us long enough! Don't you think? Get all the Congressmen over 65yrs out of Congress and Don;t Pay them nothing for screwing the Public . We the people are Speaking.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

Nov 4, 2011 9:49PM
avatar
 I have a credit score of zero(0). Because cash is king. My fear is debt. credit = debt
Nov 4, 2011 9:40PM
avatar
credit scores are a farad designed for companies and banks to charge a higher rate if you could not pay at a lower rate why can you pay at a higher rate. I was once a loan officer, hade a customer that never missed a payment, always on time had a credit score of 500 from the so called reporting companies calming he had to much credit. If he had to much credit why was he never late? uh!  Seems to me if they know he always pays why not get a higher interest rate out of him. Who do you think set's the standard for these reporting companies? not you and I. is it possible the credit card companies and banks have a say? Most who are owned by insurance companies. People create a stigma about BK's but in most cases it is the smartest thing you can do. You cancel a credit card and they keep charging you interest and late fees till it is played off sounds a lot like loan sharking to me
Jan 2, 2012 2:05AM
avatar
No one ever mentions the merchant fees credit card companies charge merchants who accept credit cards. These fees result in higher prices for everyone, even if paying in cash. You don't see a cash price and credit price at gas stations anymore because we are all paying the credit price now regardless of method of payment. I think if people realized the billions the credit card companies make in merchant fees, there would be a shift away from credit cards altogether. They are a scam to enslave people.
Nov 4, 2011 11:55PM
avatar

FYI: Directly across from the White House in D.C. sits a MASSIVE Bank of America! Coincidence, I think not. Who's got their hands in who's pockets?

Not my pockets, they're empty!

 

What the hell are we supposed to do if the crooks are the ones making law?

 

May 22, 2014 7:23AM
avatar
I recently had my credit checked for a title loan on my '90 Corvette, and found it to be "0". I'm a 54 year old male, and wonder how long will it take to build enough credit to walk into a dealership and buy a new car with 20% down, or a mortgage loan with 10% down. Could I live long enough to see either of those events? By the way, the title loan was a miserable idea. I paid it off in 4 weeks. Will it even show on my report?
Apr 18, 2014 9:43PM
avatar
My credit score is currently 691 and I am hoping to raise it to 720 by end of 2014. Does anyone have any advice?
Apr 18, 2014 9:42PM
Oct 24, 2011 5:23PM
avatar
Who cares about my credit score? I'll vote Republican they'll get me out of trouble.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

VIDEO ON MSN MONEY

TOOLS

More