Credit

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What is credit?

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Credit is the ability to borrow money or access goods or services with the understanding that you'll pay later.

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What is a credit score?

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A credit score is a numerical representation of a person's creditworthiness, typically ranging from 300 to 850.

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What factors can improve your credit score?

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Factors include paying bills on time, keeping credit utilization low, and maintaining a mix of credit types.

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What is credit utilization?

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Credit utilization is the ratio of your current credit card balances to your credit limits, expressed as a percentage.

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Why is a positive credit history important?

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A positive credit history can lead to higher credit scores, lower interest rates on loans, and better chances of loan approval.

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What is a credit limit?

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The maximum amount of credit that a person can borrow from a lender.

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What does 'character' refer to in credit?

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Character refers to a borrower's reputation for repaying debts, which is reflected in their credit score.

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What is the impact of closing old credit cards on your credit score?

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Closing old credit cards can negatively impact your credit score by reducing your overall credit limit and shortening your credit history.

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What is the difference between secured and unsecured credit?

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Secured credit is backed by collateral, while unsecured credit is not and is based solely on the borrower's creditworthiness.

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What is the smallest amount you can pay back each month on a loan or credit card called?

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The minimum payment.