How good are you with your money?Take this 2 minute quiz to get your financial wellness score!
Click Here to Start*Bonus: Learn about my new book, Get Good with Money

LRC Credit Edition - Day 2: Credit Basics

LRC Credit Edition - Day 2: Credit Basics

By TheBudgetnista -  Tags: ,


New to the Live Richer Challenge: Credit Edition? Learn more about it HERE.

Need to catch up? Click on the day you missed and then come back.

Day 1: Credit Goals

Week 1: Credit Knowledge

Day 2: Credit Basics

Today’s Easy Financial Task: Learn about credit and your credit report

How to rock this task:

  • Learn about credit
  • Learn the purpose of a credit report

You’ve made it to the second day of the Challenge. Woot, woot!

Today we’re going to dive into credit basics including what credit is and why it’s important. We’ll also discuss what a credit report is. Let’s get to it!

What is Credit?

There are two definitions of credit.

When an entity offers you a product or service that you agree to pay for later, they’re offering you this product or service on “credit.” In this case, credit is the promise or “IOU” with the understanding that you will pay later.

The second definition of credit is how good (or bad) you are at keeping the above promise. If you have “good credit,” it means you’re generally good at sticking to the agreement of paying your debts.

What Is A Credit Report?

A credit report is a detailed record of your financial history (like your ability to repay debt on time) and public records. It’s like your “money report card.”

Credit bureaus store financial data about us in huge databases. The financial information in the databases comes from data reported to the bureaus by our creditors.

When we (or other entities) search for our name, address, and social security number within the database, it pulls information about us and compiles it into an easy-to-read report.

The final product is (drum roll) your credit report. You can jump ahead of tomorrow’s task and get your FREE report here:

This site will not ask for your credit card. It will ask you to verify information that only you know about. Make sure you have access to a printer so you can print each one or save as a .pdf to access it later before you close your screen and lose access. 

Items that appear on your credit report include:

  • Personal information like your social security number, address, date of birth, and employer
  • Open and closed accounts including: credit cards, mortgages, loans, etc., and the payment history on each account
  • Public records like bankruptcies, liens, or judgments, and accounts in collections
  • Credit checks (also called credit inquiries) from lenders, employers, and other companies that you give authorization to check your credit report

The Three Credit Reporting Agencies

There are hundreds of different credit reporting agencies that collect information about us, but there are three major ones:  Equifax, Experian, and TransUnion.

These three bureaus collect financial data and sell the information to other entities, including us. The information is sold to us if we sign up for services like identity theft or credit monitoring.

Sidebar: Superman’s (my boo’s) identity was stolen and it resulted in someone buying a car in his name, running tolls, lights and eventually having a car accident. He had to go to court four times as a result. Yikes!

He signed up for an Identity Theft service and it stopped instantly. It’s worth it.

Here’s a tool I recommend: Credit Sesame. Yes! When you sign up for Credit Sesame’s free credit monitoring, they’ll automatically give you $50,000 worth of identity theft insurance, plus live access to talk to identity restoration specialists for freeeeeeee. In the event you are ever a victim of identity theft, you won’t be alone to deal with it (like Superman), because they’ve got you covered.

Protect yourself and your credit with Credit Sesame for free>>> HERE.

Back to who gets your financial information….

Your information is also sold to creditors for their review when you apply for credit. (In order for these creditors to check your report, they must get your authorization. A credit check results in a credit inquiry on your report. We’ll talk about the impact of inquiries on your credit report on Day 4 of this Challenge.)

Since there are three main credit bureaus, you also have three credit reports; one from each reporting agency.


Although most of the information on your credit reports will be similar, there may be some small differences. This is primarily because creditors are not required to report your credit history to all three of the credit reporting agencies.

They may report to one, two, or none at all!

Why Credit and Your Credit Report is so Important

Financial institutions, employers, telephone providers, and other companies review the information on your credit reports to determine your creditworthiness.

Creditworthiness is an evaluation of how likely you are to repay debt in the future. Creditors make a judgment about your creditworthiness by reviewing items on your reports like your payment history and the amount of debt you have. Based on this judgment, they decide whether or not to extend you credit and at what interest rate.

Keeping your credit report void of negative records like late payments and unpaid balances is important because poor financial history can hold you back from qualifying for a low-interest rate or qualifying for forms of credit at all.

Why Credit Isn’t All Bad

Let’s address the elephant in the room: credit is a form of debt.

Usually, when we talk of debt, we think bad news.

However, using debt responsibly isn’t always negative. For example, buying a home with a home loan can be a worthwhile investment.

You need a positive credit history to qualify for that home loan.

You need to use credit responsibly to establish that positive credit history.

Don’t worry, I’ll show you how during this Challenge.

That’s it for today Dream Catchers!

We covered a lot of information, so feel free to reach out if you have any questions! Leave a comment below.

Remember to reach out to your accountability partners to encourage each other through the Challenge. Check into the Dream Catchers: LIVE RICHER group as well. 

What's your KEY takeaway from today's task? Share in the comments! Then...

Share what you’ve learned today with your tweeps:

Today I learned what credit is and how to read my credit report. Day 2: #Liverichercredit Click To Tweet

Live richer,


P.S. Don’t forget to get your free Live Richer Challenge: Credit Edition Starter Kit. Get it HERE
P.P.S. Here’s a copy of the Challenge Calendar. It’s a fun way to keep track of your progress.


You can reach out to me here:

Twitter: @thebudgetnista

Instagram: @thebudgetnista

Facebook: The Budgetnista

Private Forum: Dream Catchers : LIVE RICHER

*** Need Help? Feeling Overwhelmed? Want to work with someone one-on-one to improve your credit? Netiva "The Frugal CrediTnista" is offering her renowned, full credit improvement services & consultations at a special discounted price just for Dream Catchers! And there's also a FREE Live Richer Credit Repair Toolkit with your name on it! Learn more and get the help you need, HERE. ***


Want to work through the Live Richer Challenge: Credit Edition in a workbook? It's part of a bestselling series and has already hit #1 on Amazon! Get your copy below.


My Lisa Rule: I have 4 sisters and Lisa is the baby (well she’s not a baby anymore). Of all of my sisters, I’m the most protective over her. Before I share any product or service with you, it must pass my Lisa Rule.

What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to either. YOU are my Lisa's. I feel protective over you and your financial journey.

The products and services I recommend pass my Lisa Rule. Yes, I may be an affiliate and earn a commission off of referrals, but I would not recommend a product or service that I didn’t believe was helpful and useful.


Get FREE Weekly Goodies!

Join the mailing list to get FREE weekly budgeting goodies directly to your inbox.
Tiffany “The Budgetnista” Aliche is quickly becoming America's favorite, personal financial educator. The Budgetnista is also an Amazon #1 best selling author (The One Week Budget and Live Richer Challenge), sought-after speaker and teacher of financial empowerment.
DISCLAIMER: Please read this Disclaimer carefully before using the Website (the "Website") operated by CLD Financial Life ("us," "we," "our") as this Disclaimer contains important information regarding limitations of our liability. Your access to and use of the Website is conditional upon your acceptance of and compliance with this Disclaimer. This Disclaimer applies to everyone, including, but not limited to: visitors, users, and others, who wish to access or use the Website.

By accessing or using the Website, you agree to be bound by this Disclaimer. If you disagree with any part of this Disclaimer, then you do not have our permission to access or use the Website.

Tiffany “The Budgetnista” Aliche is not a lawyer, accountant, credit analyst or investment broker. Information Tiffany Aliche provides during her presentations is for informational and educational purposes only. Tiffany Aliche assumes no responsibility or liability for any errors or omissions in the content provided. The content Tiffany Aliche shares in this video, workshop and/or presentation is provided on an "as is" basis with no guarantees of completeness, accuracy, usefulness or timeliness. The information shared is from Tiffany’s personal experience wherein she increased her credit score, reduced her taxes, increased her earnings and shifted her business organization. Any reference to credit scores that “Jump like Jordan” should be taken figuratively—not literally. Any reference to credit scores that Jump like Jordan is not a guarantee that your score will increase similar to Tiffany Aliche.

Tiffany Aliche’s personal success is not a reliable indicator of future results. It is very important to do your own analysis before making any financial, legal or accounting decisions based on your own personal circumstances. You should take independent financial advice from a professional, or independently research and verify any information before implementing any information that Tiffany Aliche shares and you wish to rely upon.

Affiliate Disclaimer: We participate in the affiliate advertising program, which is designed to provide a means for us to earn fees by linking to their products or services on our Website. The fact that we participate in this affiliate program means that compensates us for the inclusion of links that are clicked on and our reviews.

Changes: We reserve the right to amend this policy at any time without any prior notice to you.
© Copyright 2020 - The Budgetnista Blog - All Rights Reserved
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram