You have two kinds of passwords you can create: General and Embedded.
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A general password is a password that's created from the main Passwords section, and then usually linked as a related item to the relevant assets.

These passwords have many uses, but should always be used whenever you have a password that can be linked to multiple assets. Think of one too many relationships.

For example, you have a password for a domain registrar (such as GoDaddy) that's associated with several domains. You could create embedded passwords in the relevant assets instead, but each time the same data is entered more than once, it causes a drop in productivity levels and also introduces the risk of data entry errors.

Key benefits of general passwords:

When this kind of password can be particularly useful:

An embedded password is a password that is created from within configuration items and other assets through an Embedded Passwords section on the side panel.

You may want to use an embedded password when you have a password that can only be used in one context, such as one device. Think of one-to-one relationships.

When this kind of password may be useful:

We know how important your password security is to you. With general passwords, you will always have fine-grained control over who can access each password. But keep in mind that there are no permission settings for individual embedded passwords. To change who can access an embedded password, you will need to apply permissions to the containing item.