"As more people cut back on taking on new debt and others ditch credit altogether, fewer are ending up with rock-bottom credit scores.
Compared to last year, about 1.4 million fewer people are now in the lowest FICO scoring range,according to new data from FICO (FICO), the most widely-used credit scoring metric. This year, just 14.2% of consumers fall into the 300 to 549 score range."
Although I have had very bad credit before with multiple collections and charge-offs, and my score never hit 549. At lowest, I was probably in the 580s. I think it takes serious negligence to get that low. Maybe a drug addict who would just quickly use all the credit with no intention of ever paying it back could get there.
Negatives without any positive tradelines will get you that low.
That said, you mentioned a absolute drop in numbers down to a percentage; could you post from your source either the old percentage, or the absolute number from this year or last year?
1.4 M americans doesn't seem like a large percentage if we assume roughly 150M have a FICO score of some sort so maybe 15%? Not sure on that 150M number, just making a swag.
You'll notice that in the article it states that many consumers are no longer tracked by FICO, since they've completely fallen off the credit map by only using cash, debit cards, and payday lenders. I think that plays the biggest role in the reduction of people with the worst credit scores.