Low credit scores are keeping some Wisconsin residents from homeownership, renting properties and even job opportunities.

Reporter PrincessSafiya Byers sat down with Brenda Brown, a loan officer at Great Midwest Bank with over 20 years of experience, to find out what people should know about credit.

Here’s what you should know.

1. What is a credit score?

According to the Federal Trade Commission, a credit score is a number, typically from 300 to 850, that estimates how likely you are to repay a loan and make the payments on time.

Credit scoring systems calculate your credit score in different ways, but the scoring system most lenders use is the FICO score.

Brown said to think of it as a three-digit number that describes the information in your credit report.

2. Where can I see my credit score?

You can order a free credit report at www.annualcreditreport.com or get one by calling 877-322-8228.

3. What is a good credit score?

It depends on what your goal is.

Brown said she can help folks buy a home as long as their credit score is over 620. On average, a good credit score is considered to be 670 or above.

4. How do you build credit?

Brown said if you are new to credit, the first thing you want to do is be sure you have a bank account.

“So your direct deposit can go into that account,” Brown said. “You want to make sure that you’re managing the deposits that come into your account, and what bills you’re paying, so that you’re not overdrawn, because then that even shows the bank that you don’t know how to manage your money, so that can be a flaw.”

From there, she said, the best thing you can do is get a credit card and use it on purchases you can afford to pay at the time.

“You have to start somewhere,” Brown said. “If you don’t have established credit, then you might get your first credit card with maybe a $500 balance, and then start using the credit card for when you put gas in your car. But the catch is: Do not add more than you can pay before the due date.”

Be consistent and you’ll see your credit score go up.

5. What to do if you have a low credit score?

It takes time to fix a low credit score.

Brown suggests you give yourself a 12-month action plan.

Start by going through your monthly budget and cut any costs that aren’t necessary.

“Then you want to find a place that will give you a secured credit card,” she said.

A secured credit card is a special type of credit card that requires you to put money down. The money you put down becomes collateral every time you use your credit card. It allows you to build credit without needing to rely on a company to give you money.

Brown said to follow the same rules with your secured credit card as you would with a regular one.

“Use it for something small and pay it off before the bill is due,” she said.

Lastly, she said you have to address your debt.

“You have to deal with the issue,” she said. “You have to make those calls and get on payment plans and get it worked out.”

6. What if I use credit to help manage my bills?

Brown said the only thing you can do is cut back where you can.

“If you’re a single parent and you’re buying fast food often because you’re busy and tired, try investing in a crock pot to make time-effective meals,” she said. “You might learn new life skills by making minor changes to save.”

7. Filing for bankruptcy

Bankruptcy helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan.

The downside is that it can impact your credit for years.

“Many people think it will only impact them for seven years, but it will actually show up for 10,” Brown said. “It’s not something I suggest if you have less than $10,000 in debt.”

If you have less than $10,000 in debt, Brown suggests calling debtors and negotiating payment plans.

“Even if all you can pay is $5 a month, it shows that you’re trying,” she said.

If you do choose to file for bankruptcy, Brown said, file for Chapter 7 bankruptcy so you have the means to manage your own money through the process.

8. Enjoy the free things in life

“It can help you save if you can find things you enjoy that are cheap or free,” Brown said. “It’s almost summertime. Take advantage of the free things happening.”

For more information

You can start teaching your children good financial habits now with the help of the smart money guide.

Learn more about how credit works here.

8 things to know about your credit is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.