Credit score: Students learn its importance, impact on financial life

It is the number that could make or break you. At Shorewood High School, students say their most important lesson doesn’t end with a grade. It’s more of a number.

"No matter what career path you’re looking into or what you want to do, this is useful information for everyone to use." said junior Sylvie Damm.

This class is all about credit scores.

"We’re going into college and the age where we might be in a different city with your own bank account and stuff," said junior Enzo Litz.

Litz is thinking about his future – what he wants and how to get it. He knows buying a car or a house may not be as easy unless he has a solid credit score.  

"I think a lot of people find out the hard way," Litz said.

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"When I was a freshman in college, my mother passed away. My parents were divorced when I was in high school," Evan Schmidt told FOX6 News from his classroom at Shorewood High School

Evan Schmidt

Schmidt was a student in this room in the late 1990s. Now, he is teaching financial literacy.

"I was left with a considerable sum of money and didn’t really know what to do with it," Schmidt said. "In that situation, knowing the different options would have been really helpful."

Schmidt went on to graduate school in the Netherlands and was a boarding school teacher in Switzerland. He brings a global approach to his class back home in Shorewood. It’s paying off for Schmidt and his students.  

Last year, Gov. Tony Evers recognized Schmidt with a state Financial Literacy Award. In his remarks, Evers applauded Schmidt for starting a school investment club and for boosting interest in financial issues.  

"Unlike other concepts which are more distant – such as retirement – credit scores and credit cards are more immediate," Schmidt said.

What is your credit score, how is it calculated?

"It’s a report about your credit history. If you have a good credit history – guess what, it’s easier to pay additional bills in the future," said Kelechi Anyanwu, a certified public accountant (CPA) and volunteer with the group SecureFutures. "The next thing is how detrimental it can be for your financial future if you just miss a payment," Anyanwu said.  "It can have your credit score from being within the 700s to ‘Oh, I missed this payment and past 30 days due’ – boom plummeted down."

Kelechi Anyanwu

Your score is a record of how you repaid your debts, how much you owe in proportion to how much credit you have and the diversity of your credit. Lenders give that number to the three main credit reporting agencies.  

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A score of 800 is considered "exceptional" while a score of around 500 is considered "low." With that number, you may have difficulty getting credit or loans -- and it will likely carry a higher annual percentage rate (APR). That means someone with a low credit score will pay more in interest compared to someone with a high score.

"You can be a doctor, a lawyer – so many things – but without that finance knowledge, you may struggle even though you have enough income but you wonder ‘Where is my money going? Why don’t I have enough for retirement?’ and so forth," said Anyanwu."

Your credit score can improve

To boost your credit score, Secure Futures suggests you pay your credit card bills, mortgage and auto loans on time. Experts say to keep your balance at about 30% of your available credit or less.  Also, limit the number of credit cards you have.  

"Just have enough to hold in your hand," said Anyanwu. "Don’t have so many."

Anyanwu says even checking your credit report more twice a year can have a negative impact on your overall score.

For senior Alex Dimick, it’s ‘message received.'

"A lot of the information that we learn here is applicable to all of our lives," Dimick said. "Not just the next class period or a test."