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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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.
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