From Foreclosure To 800 Credit Score

August 30, 2018

"I raised my credit score over 800 – and you can, too!" So says Tiffany Aliche, a financial speaker and author better known as The Budgetnista.

Tiffany was working as a schoolteacher, and had excellent credit, until she lost her job in the Great Recession. "I had a choice between paying my mortgage and paying my bills. I chose to pay my bills." Due to trusting the wrong person, those bills included $30,000 in credit card debt. As she collected unemployment, she did her best to cut her expenses to the bone, losing her home to foreclosure.

"I moved in with my family, crashing on a sister's couch, and at my parent's home. I scrimped and saved. I stopped buying clothes. With four sisters, I could always borrow an outfit when I needed one!

"I watched videos to learn how to do my hair and other skills myself instead of paying for them. YouTube became my university. I was in my 30's, when people strive to be independent, but I was living like a poor college student."

One of the first things she did while her credit was still good was apply for a 0% balance transfer credit card, and then transfer her credit card debt to it. "I still was under a mountain of debt, but the interest wasn't growing. I worked hard to pay that balance down." Check out our list of 0% balance transfer credit card offers.

Despite her best efforts, her financial plight and foreclosure dropped her credit score down to 547. But by struggling for two years, and paying her bills on time, she got it back up to 750! She also learned enough about personal finance that she began her second career speaking and writing about money.

"I put myself on a barebones budget and learned that I was really good at budgeting. Even though I was on unemployment, I was still able to spend less than I was making, so I could apply the difference to my credit card balance." She also took out two other credit cards, put a small charge on each, and then paid them off promptly each month. "I put Netflix on one card, and my gym membership on the other. The bills were small, but I paid them off in full each month. The credit bureaus like when we pay off our bills in full."

About six months later, despite having a foreclosure on her credit report, her credit score reached 802. "I was so happy. All my hard work had paid off. And I had a new career to show for it!"

As the Budgetnista, Tiffany counsels others on making wise financial choices. "Payment history makes up a large part of your credit score. Paying your bills on time is necessary if you want your score to climb."

"Your credit score is like your high school GPA. Your credit report is like your complete grade transcript. Even though you can't go back in time to change mistakes you made in the past, your 'grades' from the last two years tend to weigh more than your earlier 'grades'. So wise decisions now can offset earlier mistakes.

"If you want to raise your score, the first thing you should do is go through your credit report line by line and see who you owe money, how much, and at what interest rate. If you find a mistake, contact the creditor or the credit bureau.

"If you have borrowed too much overall or on one card, that means your credit utilization is high. You can try to get another credit card to lower that.

"If your credit is too poor to get a new card, you could get a secured card or become an authorized user on someone else's card. I let my baby sister become an authorized user on my credit card to help raise her score. Of course, you should only do that with someone you trust, or you'll end up paying their bills!"

Tiffany is thrilled at how she got her financial house in order. "When I lost my job, I lost my home in foreclosure. Now I've come full circle. I recently bought a house that was in foreclosure. I felt bad when I saw some of the previous owner's belongings in the house, as I had gone through the down times that they are going through now. I hope they wind up as happy as I am."

You can check your credit score and read your credit report for free within minutes by joining MoneyTips and using our Credit Manager tool.

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