There’s a difference between what is lowest credit score possible and the lowest you can actually get [even if you tried to do bad]

Important: All the scores I will be talking about are in reference to FICO – which is the #1 most widely used for lending decisions. There are a lot of imitators out there, like VantageScore, but they’re very rarely used.

Scores can range from 300 to 850. But even though 300 is technically the lowest credit score possible, it’s very unlikely you would hit it even if you tried. To get that you literally would have to do everything wrong and have absolutely zero positive credit history whatsoever.

In the real world, the lowest credit score you can possibly get will probably be around the high 300′s. For example if you:

• Just went through a bankruptcy and for the first time it is showing on your credit report
• If you have defaulted on multiple debts and had little to no payment history on those accounts prior to default (i.e. applying for a loan and defaulting a couple months later)
• You have recently gone through a foreclosure and have had severe late payments and/or defaults on at least one other line of credit

In those types of situations, you may fall into the 300′s but the odds are slim (only 2% of the population has a score between 300 and 499). Needless to say, hitting the rock-bottom lowest FICO score of 300 is literally unheard of.

But either way… even if you’re not at the absolute worst, you might as well be since anything under 600 is mostly useless when it comes to getting a credit card (unsecured), a mortgage, or car loan.

How to improve a low credit score?

Surprisingly, you can make your way from the poor credit category to the “fair” category (scores in the mid-600’s) sometimes in just a year or two, as long as you make the right moves. Here are 5 things you definitely will want to do:

1. Maintain your good standing accounts, if you have any – Have any accounts you haven’t screwed up yet or are still open? Good. Then make sure they stay that way.
2. Open secured accounts – You can have the lowest possible credit score on earth and still qualify for secured credit cards, which is a card where you put up a deposit. Same holds true for secured loans, which you can get through a bank or credit union. If you’re fronting the cash, you can typically get approved regardless of how bad your credit score is.
3. Check your credit reports – Is it possible you are being penalized for something incorrectly? Make sure you check your credit reports, to ensure the negative information that is weighing you down is accurate.
4. Consider credit repair services or self-help guides – Sometimes you can get negative entries deleted from your credit report due to technicalities in how they were reported.
5. Have patience – As your negatives start to age, your low credit score should begin improving even if you were to have no new accounts. Unfortunately you can’t speed up the clock, but at least it’s reassuring to know that every month that goes by, your bad debt is a month older in the eyes of the credit scoring formula.

How high will you need to go?

The lowest credit score to buy a house with a mortgage might be as low as 620. But I stress that’s a big might because even though FHA underwriting guidelines don’t have a minimum score set in stone, if you are below 620 you will not be eligible for automatic approval and have to jump through many hoops with a manual process, which may not even yield results.

But in reality, in this economy it can be hard to get approved with anything below a 700. However if you are buying a foreclosure directly from a bank, with that same bank also providing the mortgage, they have been known to bend over backwards to get the approval so they can get that foreclosed home off their books.

The lowest credit score to get a credit card that is unsecured will likely be at least 650. With that type of score, you might be able to qualify for an entry level card for fair credit. For the good reward cards you see advertised on TV, plan on having a 700 or above. If you are in the low 600’s or below, you may need to go with a secured card.

The lowest credit score to get a car loan ultimately depends on what type of interest rate you are willing to pay. To get those 0% offers you see advertised on new cars, you will probably need to be in the 700’s. If you’re in say, the 500’s, it still is possible to get a car loan but you will have to pay through the roof with an excessive APR rate.

Have a low score yourself? Then please share in the comments what it is and the circumstances that got you there.