Finance

The Budgetnista Tiffany Aliche Reveals How She Her Credit Score Went From 547 To 800+

As women in and out of the workforce, we have made tremendous strides.


We've conquered everything from becoming our bosses to leadership roles where we've learned how to manage our own teams and work within the parameters of a company's budget. Yet, there's one thing that we have quite mastered yet--managing our own money.

That's right, we live in a time where we spend way more than we make--pushing aside bills and other necessities for that limited edition designer bag, or swiping our credit card every chance that we get, thus putting ourselves in more debt and sitting on a pathetic credit score that will do more harm than we can imagine.

Learning financial literacy is very important, and practicing good financial behavior can help you live the type of life you desire. Yet women of color and millennials typically overlook their dwindling bank accounts and do not educate themselves. It is only when we experience a financial hardship that we take a closer look at our finances and try to make improvements. Sometimes when this happens, we have dug ourselves in a low ditch, and while it is not impossible to get out of it, it is definitely harder.

I recently sat down with Tiffany Aliche, who is a financial guru and well-known as The Budgetnista to discuss how she went from having a 547 credit score to a score over 800 (she also saved $40,000 when she was only making $39,000 a year!), and her tips on saving, budgeting, and on building wealth.

You Can Easily Lose 40 Credit Score Points In Just One Week

At the age of 23, I had a credit score of over 800, which is an A+. A few years later, the recession hit. I lost my job, and I couldn't afford the mortgage or pay my bills. Since I wasn't paying my bills, my credit score dropped. People don't understand that your credit score is like your GPA for how you deal with money. When you don't pay your bills, your GPA drops. My credit score quickly dropped from 800 to 547 which is like a D-.

One thing that people don't realize is that 35% of your credit score is your payment history - so in other words it is contingent upon if you pay what you are supposed to pay. To rebuild my credit score, I worked hard to pay off credit cards in full at one time. When you do, it makes your credit score jump like Jordan. If you just pay the minimum amount on your bills, your credit score will do a slow climb. But if you want to make your credit score jump like Jordan, pay off a small amount of your credit card each month. I don't know why, but credit card companies care less about the amount you pay, and more about your habit in paying.

So if you pay off something in full, they are wowed. It doesn't matter if you have $8 on the card, if you pay it in full, it will make a difference. So when I figured this out, I put Netflix on one of my credit cards that didn't have a balance, and I paid it in full every month. Netflix would charge my card $8 bucks, and then I would pay them $8 bucks each month and I would see my score go up. So then I decided to do two cards like that. I had Netflix on one, and my gym membership for $20 bucks on the other. So every month, I was paying off 2 cards in full. And within a year and a half, I went from 547 to 750, which is a solid B/B+.

You Can Inherit Good Credit From Other People

To build good credit, you can be an authorized user on someone's card that has great credit. Basically what that means is that they can add you on their card as an authorized user, and you can inherit their good behavior because whenever they pay their bill, it will reflect positively on you. The primary credit card holder doesn't have to actually give you the card either - although as an authorized user you could get one.

Even if the primary credit card holder decides to stop paying their bill, it won't mess up your credit as an authorized user. That's the beauty in it - you only inherit the good credit, not the bad.

You Can Get A Secured Card When You're Young To Build Credit

When you are young, it is unlikely that you will be able to get a regular credit card because you probably will have no credit history. No credit history in the credit world is just like having bad credit or being considered a bad driver because you have no driving history. You haven't proven yourself.

To start building up your good reputation, go to your bank and ask if you can apply for secured card. A secured card is like a credit card with training wheels. The way it works, you give a bank anywhere from $300-$600 and they place it in a savings account for you. Then they give you a credit card that has that amount on it as your credit limit - so basically you are borrowing from yourself. So if you don't pay your credit card, it will take away the money that you have in your savings account. If you treat this card right, and you pay your bills when you should, they will take the secured card away and make it a regular credit card.

You Should Have At Least 3 Bank Accounts For Your Money

I recommend having at least three accounts - one just for your bills, another for spending, and then the third for savings. The account for spending should be attached to your debit card, and then the account for your bills and the account for your savings should not be attached to your debit card.

If you have the direct deposit option through your job, have your money automatically transferred to each account. Your employer may not tell you, but you can have more than one account connected with direct deposit.

Having An Online Bank Is A Must

I recommend having an online bank for your savings account because it makes your money inconvenient, and inconvenient money gets saved because it is not easily accessible. If you want to rate an online bank, go to magnifymoney.com and you can check out reviews and information on the bank.

I always tell people to have a regular bank for ease of use, an online bank for savings, and then a credit union. Credit unions are great because they will give you the best interest rates. Most credit unions are nonprofit, which means the interest that they ask you to pay is just to keep their lights on so the interest rates are lower than other banks.

Ask About Your 401K Day One Of The Job

On your first day at work, before you get into the swing of things, ask about 401K matching. Better yet, ask about this during the interview and see if the company offers it. For your retirement, many companies will match up to a certain percentage of your income that you deduct from your paycheck for retirement. So if you put 3% of our paycheck down for retirement, your company may match it. With some companies they tell you that you have to wait to be vested (usually 30 days or more) to reap this benefit, but you may can start it early if you ask.

In College, Stay Away From Private Loans Because They Are The Devil

If you get a private loan and miss one payment, you immediately fall into default. Default is on the same level as foreclosure or bankruptcy and we all know bankruptcy is like having a big, black F on your credit report. If you fall into default, it will prevent you from getting a car, an apartment - you name it. Also with a private loan, you will likely have to have a co-signer, so if you miss a payment and fall into default then your cosigner is also affected.

If you get a federal loan, you have to miss nine payments to get you to the default stage. One other thing about federal versus private loans is if you fall into a financial hardship, the federal loans will help you out and will be more understanding. But with a private loan, somebody could die and the money would still be due - they would just reach out to the consigner for the money.

You Can Get Paid To Shop

When you are in school, began saving early and get in the UPromise program. It is free to use! What I love most about it is that you can go online and sign up and then your register all of your debit and credit cards, and every time you use your registered debit or credit card at a partner store you will get cash back for your student loans. With UPromise, if you don't use it for your student loans, you can ask them to just cut you a check.

Also, whether or not you are in school, sign up for Ebates. Whenever you want to buy something online, type the store name in Ebates (it could be Target, Groupon, or whatever), and then Ebates will take you to their site and will record how much you buy and give you cash back.

Learn How To Live Off Less Than You Make

After you graduate from college, live a simple life. That can be getting a roommate or getting a used car, just learn how to live simply. If you don't, you will be forced to work a job you probably hate just to make enough money to afford your lifestyle.

Now that you know some of the secrets on budgeting, saving, and building wealth, implement these steps today and hold yourself accountable. An easy way to learn more financial tips and hold yourself accountable is through Tiffany's Live Richer Challenge and through her book The One Week Budget. In her book, she teaches us how to make responsible, financial decisions, while living a life that we desire. The Live Richer Challenge is a FREE, online financial challenge that can help you achieve your financial goals in just 22 days.

Tiffany created this program last year, and her goal was to have 10,000 women signed up and to help them master their money effectively and efficiently. In the end 20,000 people signed up and collectively all of the women saved 4 million dollars and were able to pay off over half a million dollars of debt together.

Women of color make up 70% of buying decisions, so it is time to change our mindset and change our financial situations. Let's start today and build a culture of wealth!

Related Post: 4 Lessons I Learned After Climbing Out Of $35,000 Debt While Making $12 An Hour

Sign up today and be the first to get notified on new updates, exclusive events, retreats and giveaways!

More Posts

Every now and then, the ripple effect of revolution can be felt.

Keep reading... Show less

The name of the game this year is to know your worth and demand it.

Keep reading... Show less

There's something to be said about a woman that goes after what she wants.

Keep reading... Show less

In 2011 -- a year following my divorce, I met a young man who I felt could mend my heart.

He was tall, dark, handsome, well spoken and well liked -- everything a girl could dream of on paper. In the beginning there was light, a light of hope for a new love. But as time went by, the relationship spun into darkness. Whether it was the dish I cooked, shirt I picked out, or the way I answered him, it was as if nothing I did was good enough. In fact, his dissatisfaction only made me want to work harder and do more to please.

I recall times when he'd squeeze my wrist a little too hard in public as a warning, leaving bruises -- but it was my fault because I was fragile or bruised "easily." Or the time he dislocated my shoulder and I had to lie to my child because I didn't want her to worry. Each time letting him come back because he appeared to be remorseful and willing to change. But that was only the beginning.

In 2012, I faced an unplanned pregnancy. I had just lost my job and I was struggling to pay the rent. To top it off, the father of my child had given me an ultimatum (as he was "not ready" to be a father)... it was "him or the baby." So, as you can imagine, I was struggling with the decision of bringing a beautiful new babe into my chaotic world. After all, I was already a single mother with one divorce under my belt, living check to check -- now couch surfing, all the while awaiting the big day. I felt as if the weight of the world was sitting on my shoulders -- better yet, my chest!

Although I told my ex where he could put his ultimatum, he came back around to see our child's birth. And while my gut told me to "RUN" in the other direction, I took him back out of fear. Fear of what I thought would be failing yet another child. "You can't do this alone," he said. "You need me," he said. I believed him. For a few months, things appeared to be different. Until the pressure of fatherhood began to sink in. Then the drinking, cheating, lying, and abuse began to resurface.

Oddly enough, it took one fight (like so many before) to get me to LOOK UP. "You don't do sh*t for your kids," he said. "I don't even want to be here but now we have this baby." -- "I gave you an ultimatum but I'm still here. So why wouldn't you want to make it work?" he continued. As if he was doing me a favor.

Holding my baby close, I quickly scanned the room at the home I had built for "us." It was MY blood, sweat, and tears that went into making this home, I thought to myself. At that moment, I knew I'd be damned if I allowed this to continue. I would never want this for my daughters, so why am I endorsing it for myself?

As he proceeded to punch the wall, it was as if the three years preceeding the fight flashed before my eyes. I pictured myself laying on the ground in shock like years before... but this time, it was my child crying beside me. "He's got to go," I whispered to myself. With tears streaming down my face, my hands shaking, and my body quivering in fear, I opened the front door and with everything in me yelled, "GET OUT! GET OUT! GET OUT!"

A few insults later, he managed to make it out the front door and I hit the floor... in prayer. I was ashamed. Not just because I saw this coming. But because I had been here too many times before. Although I am a different person today. There are still some days where I wish I could go back an avoid all of the pain.. much of which I am still working through today.

So, as part of the healing process, I've created a list of dating advice I'd give my younger self:

Fall in love with yourself first.

Don't spend your days in search of a partner to "complete" you. Discover what makes you SPIRITUALLY, emotionally, intellectually, and physically whole first and foremost. Then, when you do meet someone special, ask yourself, "Is this person adding or subtracting from my life" -- "Do they build me up or break me down?" I think Oprah said it best. Don't spend your life searching for the perfect person. Work to make yourself the perfect person for YOU, and then... only then, will "the right person be drawn to you based upon the work that you put out."

[Tweet "First, discover what makes you spiritually, emotionally, intellectually, and physically whole."]

If someone tells you're they're not good for you, believe them and RUN.

You cannot save everyone! While mending the brokenhearted is practically embedded in your DNA, people are who they are. Some people are going to destroy themselves, no matter how much you try to "help" them. If someone says that they are "no good" for you, or "trouble," take that at face value and run the other way. Just because you are open and capable of love does not mean the one you "want" is ready for love. You will deplete yourself by trying to "heal" this person -- which in the end, will do you more harm than good.

Trust your intuition.

It's trying to protect you! Never stop sharing your love; that's why you were put on this Earth. But sometimes real love means saying goodbye. It takes much more courage to let something go than it does to hold tight -- or try to "fix" it. Letting go doesn't mean you're ignoring the situation. It simply means you're accepting what is, exactly as it is, without fear, opposition, or desire for control.

[Tweet "Trust your intuition. It's trying to protect you."]

Talk it out!

As difficult as this may be sometimes, do NOT keep your feelings bottled up! People are not mind readers. They should not have to jump through hoops to uncover when and how they have wronged you. Pass on the fit of tears over dinner at California Pizza Kitchen and open the floor to a grown-up discussion at an appropriate time in private. Learn how to separate the person from the issue. Be soft on the person but firm on the issue. If you want to find long-term relationship success, you're going to have to learn how to communicate.

Forgive yourself.

Life didn't come with instructions. You are not your mistakes. You are not your struggles. You are here NOW with the power to shape your tomorrow. Take all the time you need to heal. The key to breaking free from your broken self, is baby steps -- taking it one day at a time. Never let a bad day make you feel like you have a bad life. Just because today is painful doesn't mean tomorrow won't be great. You WILL get there.

What advice would you give your younger self? Do share!

Keep reading... Show less

I used to struggle to get out of bed every morning, and would often hit the snooze button to get a bit more sleep. I was trapped in that cycle for years, until someone recommended yoga to me. Since practicing it every morning, my life hasn't been the same.

Keep reading... Show less