What is the lowest credit score & why does it matter?

Your credit scores are indicators of your financial habits, like your repayment history and how well you manage different types of loans. A good credit score can help you access credit for both everyday expenses and major purchases. On the other hand, low credit scores can make it more difficult to get approved for credit.

But what is a low credit score? And what’s the lowest credit score someone can have? Find answers and learn what factors might lead to a low score.

What you’ll learn:

• With the most popular credit-scoring models, the lowest credit score possible is 300, but some people may have no credit score due to low credit limits or nonexistent credit histories.

• Missed payments, late payments, bankruptcies and defaults can lead to lower credit scores.

• Credit reporting errors and fraud might also affect scores if they go unnoticed.

• Having a low credit score can make it harder to access credit and may result in higher interest rates.

Generally, credit scores range from 300 to 850, making 300 the lowest possible credit score. But it’s important to note that you typically have more than one credit score. And they may differ depending on the credit-scoring company and when they were calculated. 

For instance, FICO® says scores below 580 are poor, while VantageScore® categorizes poor scores as below 500. Ultimately, credit decisions and what might be considered good or bad are up to individual lenders. But it still might help to take a closer look at credit score ranges according to how FICO and VantageScore categorize them:

Several factors can result in lower credit scores, including: 

• Inconsistent payment history: Late or missed bill payments often cause your credit score to drop. In fact, payment history can account for up to 35% of your FICO score.

• Bankruptcies, defaults or foreclosures: Public information like bankruptcies could appear on your credit report and impact your score for up to 10 years. Similarly, defaulted loans and foreclosures may result in a very low credit score.

• Short credit history: Having little or no credit history or a thin credit file can result in a lower score or no score at all. 

• Mistakes on your credit reports: Credit report errors—like missing, incorrect or outdated information—or credit card fraud could also lower your score. Monitoring your credit reports regularly can help you identify errors or potential fraud.

Each person’s financial situation is different, but here are some of the ways a low credit score could affect you:

• Credit access: Lenders typically consider credit scores during the loan or credit card approval process. Higher credit scores may indicate less risk for lenders, while lower scores may indicate a greater risk. So applicants with lower scores may not qualify for certain loans or credit cards.

• Interest costs: Credit scores may affect your interest rates, too. Borrowers with lower scores may face higher interest rates. And higher interest rates can lead to higher monthly payments on installment loans or revolving credit balances.

• Housing and career: Some landlords or employers may run credit checks during the rental application or hiring process. Each state has different guidelines around how your credit information can be viewed and used. But low credit scores could restrict your ability to rent an apartment or get certain jobs.

• Insurance premiums: In many states, home and car insurance providers can check your credit during the application process. A lower credit score could be considered a risk factor and may result in higher monthly premiums.

If your credit scores are currently low, there’s good news—a low credit score doesn’t have to be permanent. Here are some tips to help you establish credit or build better scores over time:

• Make timely payments on existing debt: To reduce the risk of missed or late payments, consider creating a calendar reminder or setting up automatic payments each month.

• Monitor your credit utilization rate: Credit utilization measures how much credit you’re using compared to the amount available to you. Higher credit utilization rates can negatively impact your score. Experts recommend using less than 30% of your available credit.

• Keep new credit applications to a minimum: Try to only apply for the credit you need, and consider getting pre-qualified or pre-approved before submitting an application for a credit card or loan. This can help you get a better understanding of the types of credit you may qualify for, often without requiring a hard credit check.

• Check your credit reports: Check your credit reports regularly to identify potential errors and track your overall credit health. You can request free copies of your credit reports from the three major credit bureaus, Equifax®, Experian® and TransUnion®, at AnnualCreditReport.com. Or you can use CreditWise from Capital One. It’s free—even if you’re not a Capital One cardholder. And using it won’t impact your credit scores.

• Consider using a credit card to build credit: Credit cards can be useful tools for building credit—if they’re used responsibly. If your scores could use some work, you may consider applying for a secured credit card. Or you could become an authorized user on the credit card account of a trusted family member or friend. In both cases, you can use the credit card to make purchases. And practicing good credit habits, like maintaining a low balance and making timely payments, can give your score a boost.

Find out more about credit scores with the answers to these frequently asked questions:

The lowest possible credit score is typically 300. A low credit score can make it difficult to access credit and may yield higher interest rates. However, you can improve your score over time by taking steps to establish your creditworthiness. 

If you’re ready to improve, rebuild or start your credit journey, explore Capital One cards for fair and building credit that can help you build credit with responsible use.