To describe variable credit status that has three levels: Excellent, Good, and Poor, we need to use two different dummy variables.

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To represent three categories (Excellent, Good, Poor) in a regression model, we need two dummy variables because one category can be inferred from the others. For example, if both dummies are 0, the category is the one not represented by a dummy variable.

To Describe Variable Credit Status That Has Three Levels: Excellent