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What are the two most important factors in calculating your credit score?

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Payment history and amounts owed.

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Why is it beneficial to pay more than the monthly amount due on an amortized loan?

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The extra payment will be applied to the principal amount you owe, which will pay down your debt more quickly.

Front

How does a credit score affect monthly payments on a car loan?

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A higher credit score typically results in lower monthly payments, while a lower credit score leads to higher payments.

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What defines a personal loan?

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Personal loans are lent based on your personal credit history rather than secured by an asset like a house or car.

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What is the impact of missing a credit card payment?

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Missing a credit card payment can negatively impact your credit score.

Front

What is an amortized loan?

Back

An amortized loan is a loan with scheduled payments that cover both principal and interest over a specified period.

Front

What is the significance of payment history in credit scoring?

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Payment history accounts for a significant portion of your credit score, reflecting your reliability in repaying debts.

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What is the difference between secured and unsecured loans?

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Secured loans are backed by collateral, while unsecured loans are not and are based solely on creditworthiness.

Front

What does it mean to negotiate a lower monthly payment with a lender?

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Negotiating a lower monthly payment involves discussing terms with your lender to reduce your payment amount, which can help manage debt.

Front

How can extra payments on a loan affect the total interest paid?

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Making extra payments reduces the principal balance, which in turn decreases the total interest paid over the life of the loan.