What is a Credit Score?

Besides something that follows you around everywhere you go; this is a

visual display to creditors (banks/credit card companies/insurance companies) as to what kind of risk factor you are ...

In other words your credit score indicates to a creditor the likelihood you will repay a debt.

From your credit score and often other criteria like income, debt and work history; they will make a decision as to whether to give you a low rate of interest because you are a good risk and will pay them back

... Hit you with a high interest rate so they can make their money back quickly since they need to cover themselves in case you do not pay them back at all.

It does not matter what your intentions are, nor does it matter if you are a good person ... It is a number that dictates how much they should charge you in return for giving you money or credit.

The least expensive rates out there - the FHA home loans or the CHAFA and VA loans are all based on your FICO Score.

This is why I am focusing on getting your scores up , so you can qualify for a solid low interest 30 year fixed loan.

Not to mention there are no longer any loans out there for folks that have credit scores less than 580 or 600.

You can have the best chance at getting the absolute best price out there for any and everything you buy if your credit scores are in the GOOD Range and above!!! Ideally we like to see folks get their credit scores above 620.

So let’s keep up with the times and dive right in! You are in your home, determined to improve your finances and on your way to getting financed for a mortgage.

Owning a home is a great decision and a fantastic investment. It takes some time and energy not only to take care of the physical property but also to manage the finances that go along with it.

Let’s start with the basics…the ABC’s of finances and then each month we will add more information on credit and improving your scores.

Truly, you will never get great credit scores until you know where your money is at all times. You know what I am talking about…the dreaded BUDGET !

A budget is the only practical way to get control of your spending .A budget also ensures that you are spending money where you think and want to be spending.

A budget involves: evaluating your current spending habits, determining your financial goals and track your spending to make sure you stay within the parameters you have set for yourself.

There are many software systems out there like Quicken® and Microsoft® money, or I have a sample budget on the EZQualDreamHomes.com website under articles and forms. Feel free to copy and past in a word document and print it out to use. Anything is better than nothing!

Making a budget and sticking to it is tough, but it will ensure your money gets used the way it needs to in order to improve your credit; so you can get the best rates for all your purchases, allow you to save money so you can treat yourself and your family to trips and toys, and sleep better at night because you know where your money is going and there is enough to pay the bills.

Most of us make common spending mistakes. Don’t sweat it…just sit down and start. Once you have the basics written out it will be easy to follow and tweak.

First- How Much Money is coming in???

Income from:

	Your work
	Your spouses work
	Child support
	Alimony
	Disability
	Social Security
	Anything that comes in on a regular basis

These are the funds you have to work with on a monthly basis. The goal is to spend less than this total amount each month!

Then you have the Debts or Expenses. This is what bills you pay, loans, anything that costs you money on a daily or monthly basis.

Expenses Include:

	House rental payment
	Car Loan
	Utilities
	Insurance
	Childcare
	Groceries
	Credit card
	Memberships
	Gas
	Miscellaneous- anything that is routine like movies, clothes, and so on

Then you add up all the expenses and subtract from your total Income. This gives you an overall amount of what comes in and what goes out. Then you want to fine tune it according to the date the money comes in and when bills are due. You will tweak when the time to buy groceries or can you afford that new outfit right now?

Then, sit down with your significant other or any decision makers and look at the budget you have just drawn up and see if your goals are matching your budget. If not you need to honestly look at where money is being spent and make changes to ensure you are spending in the areas that you feel are most important.

Tips to cutting costs:

	Eliminate the trivial and needless costs. You know what these are…the mid afternoon “vente latte” or the lunch at the restaurant instead of bringing your lunch to work for a fraction of the price.
	Buy clothes and routine supplies when they are on sale, save up for those purchases. These can really add up.
	You likely get a raise each year. Don’t make a big purchase or increase your life style with the increased funds. Instead continue to live at the more modest level and save your money in a savings account. In fact if you can save 10% of your income every month you will see your nest egg growing.
	Do not spend beyond your limits….that means don’t take money out of the ATM and then someone else write a check without knowing funds have come out. Everyone needs to know where the money is at all times.

Keep a record of checks that are being written. Make sure the funds are available; never assume you know what is in your account.

Use automatic payments as much as possible so that you can determine when funds are coming out and you can account for them routinely.

When you are projecting how much money you can live on you do not want to include the money that you are not certain you will get. That means do not assume you will get overtime every month, or that someone you loaned money to will pay you back as soon as you think. Those are the things that you will have as extra but not what you rely on to make ends meet.

You can always go onto EZQUalDreamHomes.com and go under “Articles and Forms” and use the budget worksheets available for you.

Don’t forget to schedule yourself for the FREE First Time Home Buyers Class and that schedule is also online under “Current Tenant Info”

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