Why do credit scores go from 300 to 850? Why not just start at zero and go to 550?

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Who decided that credit scores should start at 300, and why? Is it just a nice arbitrary number? If scores just fall on a linear distribution from 300 to 850, wouldn’t it just be easier to start at zero and count up to 550? What is the benefit to starting at 300? That seems SO crazy to me.

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26 Answers

Anonymous 0 Comments

So let me add a little to this, my father worked at TRW when this whole thing was being designed in the 80’s. The way he explained it; look at it as a percentage across a range, if you are at or below 300 you’re not worth tracking cause you are beyond the debt risk threshold eg you’re in the bottom 30%. If your score is 800 you’re in the top 20% and you are mostly likely using assets for credit because you can get way better rates. Which is why ‘good’ credit starts at 700 cause you are 70% likely to pay off the loan and all the interest.

It’s not how reliable you are or a measure of your ethics, it’s a percentage factor of how likely the lender will make money off you. Which is why in some cases you can negotiate to raise your chances and you will pay both the loan and all the expected interest. So the score is all about percent chance of full profit for the lender.

Anonymous 0 Comments

So let me add a little to this, my father worked at TRW when this whole thing was being designed in the 80’s. The way he explained it; look at it as a percentage across a range, if you are at or below 300 you’re not worth tracking cause you are beyond the debt risk threshold eg you’re in the bottom 30%. If your score is 800 you’re in the top 20% and you are mostly likely using assets for credit because you can get way better rates. Which is why ‘good’ credit starts at 700 cause you are 70% likely to pay off the loan and all the interest.

It’s not how reliable you are or a measure of your ethics, it’s a percentage factor of how likely the lender will make money off you. Which is why in some cases you can negotiate to raise your chances and you will pay both the loan and all the expected interest. So the score is all about percent chance of full profit for the lender.

Anonymous 0 Comments

You make a good point that starting at 300 for credit scores seems arbitrary and unintuitive. There are a few reasons why 300 was chosen as the base score:

1. When credit scores were first introduced in the late 1980s, lenders were already used to seeing credit ratings on a scale of A through F. The number 300 was chosen as a neutral middle point on this new numeric scale, so scores below 300 were considered “subprime” and above were “prime”. This made the new scores easier to understand for lenders at the time.

2. A score of 300 establishes a wider range of possible scores, from 300 up to 850. This wider range gives more resolution to distinguish between people with good and bad credit. If the scale went from 0 to 550, it would be harder to precisely rank people in the middle. Think of it like a test score—a scale of 0 to 100 only has 101 possible values, but a scale of 300 to 850 has 551 possible values.

3. A base of 300 still allows the majority of scores to fall in a “normal” range, from 600 to 800. Most people have scores in a narrower range, even though the full scale is very wide. The extra width at the bottom, from 300 to 600, allows more differentiation for people with bad credit.

4. Psychology: Starting at 300 leads many people to believe their score is already “average” or not too bad before they even start building credit. If the scale started at 0, a low score like 200 might seem extremely bad, even though it means the same thing as a 300. It’s a subtle psychological effect, but it helped make the scores more palatable when first introduced.

Anonymous 0 Comments

You make a good point that starting at 300 for credit scores seems arbitrary and unintuitive. There are a few reasons why 300 was chosen as the base score:

1. When credit scores were first introduced in the late 1980s, lenders were already used to seeing credit ratings on a scale of A through F. The number 300 was chosen as a neutral middle point on this new numeric scale, so scores below 300 were considered “subprime” and above were “prime”. This made the new scores easier to understand for lenders at the time.

2. A score of 300 establishes a wider range of possible scores, from 300 up to 850. This wider range gives more resolution to distinguish between people with good and bad credit. If the scale went from 0 to 550, it would be harder to precisely rank people in the middle. Think of it like a test score—a scale of 0 to 100 only has 101 possible values, but a scale of 300 to 850 has 551 possible values.

3. A base of 300 still allows the majority of scores to fall in a “normal” range, from 600 to 800. Most people have scores in a narrower range, even though the full scale is very wide. The extra width at the bottom, from 300 to 600, allows more differentiation for people with bad credit.

4. Psychology: Starting at 300 leads many people to believe their score is already “average” or not too bad before they even start building credit. If the scale started at 0, a low score like 200 might seem extremely bad, even though it means the same thing as a 300. It’s a subtle psychological effect, but it helped make the scores more palatable when first introduced.

Anonymous 0 Comments

Lot of wrong answers here. The right answer is much simpler: There are other FICO scores that go from 0-300. There’s not one “FICO score” — there are hundreds, depending on what bank you’re using, what version you’re using, whether it’s designed for a particular industry, etc. The one most people know about is on a 300-850 range, but it’s not the only one.

Funny story: About a decade ago the credit bureaus introduced their own score, the VantageScore, to try to break up the FICO monopoly. FICO sued them claiming that VantageScore, which at the time used a different scoring range (500 to 990, I think?) infringed a trademark FICO had taken out over the range 300-850 — because some of the numbers overlapped. It went to a jury, and the jury found not only that the trademark wasn’t infringed but also that it was fraudulently obtained. But FICO actually tried to, in effect, trademark three digit numbers. No joke.

Anonymous 0 Comments

Lot of wrong answers here. The right answer is much simpler: There are other FICO scores that go from 0-300. There’s not one “FICO score” — there are hundreds, depending on what bank you’re using, what version you’re using, whether it’s designed for a particular industry, etc. The one most people know about is on a 300-850 range, but it’s not the only one.

Funny story: About a decade ago the credit bureaus introduced their own score, the VantageScore, to try to break up the FICO monopoly. FICO sued them claiming that VantageScore, which at the time used a different scoring range (500 to 990, I think?) infringed a trademark FICO had taken out over the range 300-850 — because some of the numbers overlapped. It went to a jury, and the jury found not only that the trademark wasn’t infringed but also that it was fraudulently obtained. But FICO actually tried to, in effect, trademark three digit numbers. No joke.

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