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There are ways to repair your credit

JANESVILLE — Mary Herrmann and Rod Benstead, counselors at the Consumer Credit Counseling Service, answered common questions about credit scores and repairing bad credit.

Q: How is credit measured?

A: A credit score is a snapshot showing how likely you are to file bankruptcy. The score runs from 300 to 850. The higher the score, the better, making it easier to get loans at a good interest rate, to rent an apartment, to buy a house and to get decent insurance premiums on cars. A low credit score make those things more difficult and expensive.

Your score can change daily as you add credit or pay off a bill.

Forty-five factors go into a credit score, but the factors aren't publicized because companies don't want people manipulating the scores.

Q: What lowers a score?

A: Missing payments is the single biggest reason. One late payment can bring a score down 50 to 150 points, so it's crucial to make payments on time. Your score also takes a big hit if an account ends up at a collection agency.

The debt you carry lowers your score. You lower your score every time you apply for credit or get a loan. Even applying for a cell phone can take your credit down a few points.

Q: Can you improve your credit score?

A: You can start improving or destroying your credit score immediately.

You will improve your score by paying off on time five types of loans: a mortgage, a car or installment loan, a credit card, a personal loan and a student loan.

Some people don't have a score because they have none of the above. Rent and utility payments don't reflect on Wisconsin credit scores.

People can start building a good score by using one credit card responsibly over several years. A college student, for instance, does well to get one credit card, charge his or her gas and pay the bill on time every month. The young person using one credit card responsibly can earn a score in the upper 700s.

Q: How do you improve your credit score?

A: Make payments on time. A late payment remains on your credit score for seven years. The further you get away from that, the better you are.

Judgments against you should be taken care of immediately. A judgment means that a creditor took you to court and can garnish your wages. That's a biggie on a credit report. Also, clean up any accounts in collection.

But first, look at your budget. It makes no sense to make promises to creditors without getting a budget in place. The foundation to a good credit report or repairing a credit report is a budget that works. That might mean making sacrifices.

It may also mean giving up credit cards.

People who declare bankruptcy, for instance, usually are advised to avoid credit. You might assume you couldn't get it, anyway. But some credit card companies target people who declare bankruptcy. Because customers can only declare bankruptcy once every eight years, credit card companies know they could get judgments and garnish the wages of people who previously declared bankruptcy.

People who rent can be an exception to that credit card rule. A renter might need a credit card to rebuild his or her score. That person could buy gas on credit, for instance, and set the money aside so he or she makes timely payments every month.

Q: Can I see my credit score?

A: Yes. It is important that you check your report once a year for inaccuracies. One way is to go online to www.annualcreditreport.com.

Credit activity remains on your report for seven years.