Good credit is golden

One of the easiest things to remember is that good credit is the road to financial happiness. That’s because good credit is the go-ahead ticket to the ability to buy nearly anything you want because the seller knows you are good for the funding.

The other side of the coin is that good credit can be devastated if one is not paying attention to the bills that need to be paid. Under the accepted scoring system that many of the lenders use for everything from homes to cars, potential buyers who have paid their bills and have achieved a good credit score will have no trouble getting the loan they need. The score system is based on how you handle your payments. Do you pay? Do you pay on time? That kind of thing. You get your very own score for your financial history.

If you need to get your finances in order, do it. It will pay off big. Develop a family budget. Look over about six months or so of money you actually spent by using receipts. This will show you how much you did spend. Take that figure, add a bit for unexpected expenses such as car repairs and illnesses. And, you have a budget of sorts by also determining the regular monthly bills such as rent.

If you have debt, reduce it. Lenders generally look for a total debt ratio of no more than 36 percent of income. If this figure includes your mortgage, which usually ranges between 25 to 28 percent of income, you will need to get the rest of installment debt like care loans, student loans, revolving balances on credit cards — down to between 8 to 10 percent of your income.

Some folks have trouble running wild with credit cards. The cure is to pay off the debt, don’t buy anything else on the card and destroy it before your credit is destroyed. If necessary, get a part-time job like delivering pizzas, etc., to get your income up high enough to qualify for a home.

If you want a home of your very own, start by creating a house fund. Decide on a certain amount and religiously put it in a housing account and leave it grow. And grow it will.

There are a lot of home financing plans out there. Some are so good they are almost giving you a home on a platter. The other way of looking at this is to start saving toward a 20-percent down payment on that home you will be buying. The more you put down for that payment usually equates to a better rate and a lower overall cost.

Keep your job — especially if you enjoy what you are doing to put bread on the table. If you are going to buy your house soon, keep your job as it will probably save you from a higher interest rate if you have had your job for less than two years.

Getting your finances in order is not difficult if you follow a few of your own rules, make any payments by the due date and pay off any debt you may have promptly — especially credit card debt.

It really pays to get your finances in order. You are the only one that can do it and you might as well enjoy being as debt-free as you can be.