Reaching and 800 Credit Score: A Financial Transformation

Contributed by Phylecia Jones, Budgetologist & Solopreneur Money Management Expert www.keepupwithmrsjones.com


Your credit score is one of the most important numbers in your life. A score of 800 opens up many avenues for better loan options, approved applications, and lower interest rates. But what does it take to get there? I had the pleasure of interviewing Lydia Thomas, a Senior Accountant and Women of Denver member, about her journey of moving to the United States from Ukraine five years ago, alone and with little money.

Lydia knew that focusing on her finances, establishing credit, and educating herself about money was the key to reaching her dreams. In a short amount of time, she launched a successful career, quadrupled her salary, paid off a car loan, and reached a credit score of 800. Her story will not only inspire you, but give you a glimpse of what it takes to achieve a financial transformation.

Lydia, you started with virtually no established credit when you moved to the United States and now you have an 800 credit score. How did you do it?
I started working on my credit score as soon as I moved to the U.S., because I knew how important it was in order to get a good rate on a loan if I needed one. The most important rule I learned was to keep my credit card usage to a minimum and pay off the balance every month. NOT a minimum payment, but the full balance. To fast-forward credit score growth I did not close my oldest credit card, I requested an increase of my credit line, had various credit cards and loans, and avoided unnecessary credit inquiries. It works and your credit score will move up, only if you pay off the balance regularly, or pay the monthly payment if it’s a car loan or a mortgage.

Coming from Ukraine to the US, what did you find different about money and personal finances?
In Ukraine, there is no trust in the economic and banking system. People tend to save their money, “under the mattress,” meaning that the best way to save is to convert the national currency into dollars or euros and keep it in cash at home. Talking about money is generally taboo and personal finance education is non-existent. In the US, conversations about money are more open. There’s more information about various ways of managing finances online and in print, and there is more stability and trust in general. I learned very quickly in the States that when you have it together, do some research, and organize your finances, you are likely to succeed financially.

Having a budget is very important to managing money. How has it been living on one?
I have been living by a budget for a few years now. Having an effective budget is pretty hard, I have to say. A budget made me go from an extreme of watching every penny, (exhausting, to say the least), to splurging when I felt like I’ve been a good girl for a while, (which would turn into the feeling of guilt and regret).

How did you get over the extremes of watching every dime to feeling guilty for ‘splurging’?
After a while I came up with the expense vs. investment rule. Take a pair of shoes for example: If you buy a pair of cute sandals that will be your fifth pair of sandals, you will probably wear them only a few times. This is an expense. If you buy a pair of good leather shoes that you need for your job interview that will serve you for a few years, this is an investment in your future. Following this rule helped me shop less, save more money and end up with the purchases I really needed.

With your smart money moves, what is your biggest financial goal right now?
My biggest financial goal right now is to buy a house. It is one of the most important financial decisions I will make in my life, and what I learned from other people’s experience is that buying one is easy, but paying it off is hard.

What are three simple things readers can do right now to get ahead of their finances?
First, set up a direct deposit to your savings account from your paycheck. The psychological aspect of the “invisibility” of such transaction does wonders. Make it $20 or $200, whatever you can afford. Second, watch your budget. Make your budget real and attainable, not ideal (otherwise you’ll get discouraged very quickly) and have Friday “dates” with your budget and the expenses for the past week. Taking control is gratifying and reduces stress. Third, get a debit card for your “shopping” needs and have a certain amount deposited there from your paycheck. This will be the only money you can spend on the things you enjoy. It is a great controlling tool. Speaking from experience! ​