Life in the Credit Basement: When Low Scores Are a Source of Pride

Get the Better newsletter.
By Bill Briggs

They're zeroes, and proud of it.

In the happy depths of the credit basement, a rare place 300 points beneath the lowest-measurable FICO score, a sub-culture is humming, and some of its inhabitants – many of whom worked hard to descend there – now aim to be heard.

They’ve paid every outstanding balance, yet gleefully dumped their all-consuming chase for seductive, sky-high credit scores, spurning the pump-your-number advice of financial experts like Suze Orman. They refuse to play, ever again, what they dub “the debt game” as they niftily navigate the American economy via all-cash lifestyles.

“It’s the only New Year’s Resolution I’ve ever kept: My wife, Alana, and I just wanted to get out of debt, but as we did, we found we cared less and less about our credit score,” said Brad Chaffee, 38, who lives in Charlottesville, Va. In 20 months, they sold their bank-owned house and vehicle, paid off student loans, fulfilled then closed all credit lines, and bought a cheap car on eBay. By October 2009, they had achieved their goal. They have never gone back.

"Everybody also says: You've got to have this credit score. I asked: What if you don't have one?"

“We decided to make decisions based on what was better for us financially instead of what was better for some three-digit number that’s thrown around like it’s a lifeline that we all need to survive,” Chaffee added.

To ensure his newly sparse credit record contained no errors, Chaffee checked with FICO, the company that calls itself "the standard measure of consumer credit risk in the United States," offering a scale of 300 to 850, allowing lenders to assess personal debt. He got an unexpected response: “There is not enough information to calculate a score.” That brought a grin.

Within a rising subculture to flee FICO’s influence, people like Chaffee utter the mantra: “The perfect FICO score is probably zero.” He adds: “I’m perfectly happy without one.”

But in a consumer nation where plastic holds sway – where credit numbers can determine everything from whether you qualify for a home loan or for lower auto-insurance rates or even for a job – the people who flaunt their zeroes remain relatively few.

At FICO, headquartered in San Jose, the company tracks approximately 200 million adults with FICO scores. Among American consumers, the typical credit score sits somewhere between 750 and 799. To generate a FICO number, consumers must have one credit account that’s been open for at least six months and an account that’s been reported by a lender to a credit bureau during that same time, according to FICO.

“Oh, one more thing,” FICO spokesman Anthony Sprauve wrote in an email. “You can’t be dead.”

Not everyone is as joyful as Chaffee about their low status on the credit totem pole. The economic downturn seems to have created, for millions of consumers, a long-term spot near that credit rung of 300, FICO figures show. In October 2011, 6.3 percent of consumers had credit scores that were under 499. In October 2010, 6.9 percent of consumers were among that group. In other words, the size of the group has only dwindled slightly during the recovery.

But what's also true about consumers who involuntarily tumble toward the 300s: their plummets often require a torrent of bad luck, vastly irresponsible spending, and a total abandonment of their bills, experts say.

"I’m sure somebody could go to 300 by stopping to pay everything. The 400s are certainly possible, but you would have to work — or not work — pretty hard to have that happen," said Geoff Williams, co-author of "Living Well with Bad Credit." How does he know? In 2008, Williams filed for bankruptcy. His worst FICO score? About 550.

"We decided to make decisions based on what was better for us financially instead of what was better for some three-digit number that’s thrown around like it’s a lifeline."

There are about 240 million U.S. residents over age 18, according to the Census Bureau. Based on that tally, Sprauve said it’s “accurate and logical” that some 40 million American adults do not have enough credit history to post a FICO score. Chaffee is trying to lure more consumers to pay their debts yet merrily live among the cellar dwellers

“A lot of people tell me: ‘You don’t have to be that extreme.’ Well, how is the other option working for a lot Americans right now?" Chaffee asks.

“So many of them have big, bloated debts and mortgages, all because they are chasing that score. It just doesn’t make sense to me,” said Chaffee, a financial blogger and stay-at-home father of three children.

Brad Chaffee plays with his children at home in Charlottesville, Va. Chaffee has no credit score and doesn't care, he says, because he's adopted a no-debt lifestyle as part of a series of financial decisions to reduce costs and gain financial freedom.John Brecher / NBC News

He hasn’t made many lifestyle concessions, Chaffee asserts. Grocery shopping – or car rentals or airline-ticket purchases – can be accomplished with his debit card. The family rents a town home. They own a pair of 2001 cars. Their oldest child attends a private school, and they pay the tuition in cash.

In Pittsburgh, Steve Adkins, 42, also lead a cash-only existence after paying off his home, his debt, and purposely closing all of his credit cards. The process took about five years. In December, he checked with FICO and received this email back: "Our apologies, an error has occurred ... We regret that we cannot provide you with your FICO score report as your report at Equifax does not meet the minimum scoring criteria."

"Everybody also says: You've got to have this credit score. I asked: What if you don't have one? So It was good to finally say, 'Hey, I don’t have a score and the world hasn’t come to an end,' " said Adkins, who holds part-time jobs as an engineer and a financial coach. "It's achievable for anybody, if they're willing to work at it."

Hundreds – perhaps thousands – of like-minded consumers are knocking at the credit-basement door, wondering if they, too, can enter the club. That group includes Steve Stewart, 45, a St. Louis-based financial coach and an auditor at CKE, the parent company of Carl’s Jr. and Hardee’s.

"Our numbers have been growing since the Great Recession," said Stewart, who has paid off all of his debt except for a mortgage, on which he owes 26 installments. That lone data point gives him a FICO score of 769. But he longs to attain that coveted credit goose egg.

"It's a game we're just not going to play anymore. It's distracting us from being financially successful because it leads to overspending," Stewart and. "I don't know if you want to call us radical – I don’t think we’re that extreme.

"But if this is a movement, I want in."