Battlefield 3 negative skill level?

It goes based on your placement in relation to others. If you were MVP 2, and your skill level before this match was 100, but everyone else in your server was skill level 0, and you only barely beat them, then your skill will still go down.

Conversely, you can just barely come last, but if your skill was 0 and everyone else had 1000, then you'll go up.

Skill level has been said to be based on Elo rating system. Exact algorithm is not disclosed, but from my experience it seems, that it takes in account kills, rather than score (unlike MVP badges which are score only).

You gain/loose SL each time you kill/die. If you kill highly skilled player, you gain lot of skill points, if you kill low skilled player you gain few. On the other hand if you get killed by more skilled player, you loose less points, than when killed by low ranked one.

In standard ELO skill level 0 means that you're exactly average. Negative is below average, positive is above average. However, this doesn't seem to be the case in BF3's modified ELO.

Looking at BF3Stats, seems that median skill level is about 450.