Can Your Credit Score Get Down to 0?

Your credit score is one of those things you may not stop to think about until you're gearing up to apply for a credit card or sign a loan. But actually, that number is really important, because it tells lenders how reliable a borrower you are -- or not.

The most commonly used credit scoring method is FICO, which ranges from 300 to 850. So if you're wondering if it's possible to have a credit score of 0, the answer is no.

However, a 300 is basically the same thing as a 0. And anything below 580 is considered poor. So if your credit score is hovering in unfavorable territory, it's best to do what you can to raise it.

What a really low credit score means for you

A really low credit score sends the message to lenders that you don't tend to repay your bills and debts on time, and that you may already have more debt than you can handle. So if you have a credit score in the 300s, it's very unlikely you'll be approved to take out any sort of loan.

If your credit score is below 580, the same holds true. Clearly, a credit score of 500 is better than a 320. But you may not have many borrowing options with a 500, either. And even if you do manage to get approved for a loan, you could end up with an exorbitant interest rate on it.

How to raise your credit score

If your credit is poor, one thing you should know is that it can take a fair amount of time to build up your score to a more favorable level. It's important to recognize that so you don't get discouraged if you don't see results within a few months. But in the course of a year, for example, you might see a notable improvement in your score.

You can take several steps to raise your credit score, but the most important thing to do is establish a solid payment history. That means being timely with bills and paying them in full.

Another big step you can take to boost your credit score is to pay down some existing credit card debt. This is an especially important thing to do if you've maxed out your credit cards. Your credit utilization, or the amount of revolving credit you're using at once, also plays a big role in calculating your credit score.

Lenders like to see that you're only using a modest percentage of your total available credit. So once you rack up a balance on your credit cards that exceeds 30% of your total spending limit, it can reflect poorly on your credit. And if you're using 100% of your credit limit, that's even worse. So if you're able to whittle down your credit card balances over time, your score might start to improve nicely.

Finally, check your credit report for mistakes. Perhaps there's a delinquency on your record that's not actually legitimate. Successfully disputing any errors you find will result in them being removed from your credit report and a positive effect on your credit score. And depending on the error, this effect could be a small bump in score, or one more meaningful.

A study conducted by the Federal Trade Commission a few years back found that 20% of people have an error on their credit report, so read yours carefully and be on the lookout for mistakes. Credit bureaus are obligated to investigate reported errors, so the sooner you raise an issue (if applicable), the sooner that mistake might get fixed.

While your credit score can't get down to 0, it can get down to 300, and that's just not a good thing at all. If your credit needs work, make the above moves to open the door to more borrowing possibilities.