Types of Credit Test

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What is a payday loan?

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A payday loan is a short-term, high-interest loan typically due on the borrower's next payday, requiring proof of income but not a credit check.

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Why are payday loans easier to qualify for than traditional bank loans?

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Payday loans require proof of employment or other regular income but not a credit check.

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What is a fixed rate, secured debt?

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A fixed rate, secured debt is a loan where the interest rate remains constant throughout the term, and the loan is backed by collateral, such as an auto loan.

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What is the difference between credit and debit card usage in terms of credit score?

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Only credit card usage affects your credit score; debit card usage does not.

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Why do credit card companies prefer minimum monthly payments?

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Credit card companies prefer minimum payments because it allows them to earn more money from interest charges.

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What does the term 'term' refer to in loans?

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The term refers to the length of time it takes for a loan to be paid off completely with regular payments.

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What is the principal in a loan?

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The principal is the original sum of money borrowed in a loan, excluding interest.

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What is an interest rate?

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An interest rate is the percentage of a loan charged as interest to the borrower, typically expressed on an annual basis.

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What does APR stand for?

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APR stands for Annual Percentage Rate, which represents the yearly cost of borrowing, including interest and fees.

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What is a credit score?

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A credit score is a numerical representation of a borrower's creditworthiness, based on their credit history.