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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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.
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