Unsecured Credit

Unsecured credit is a type of loan or credit that is not backed by collateral, such as a house or car. Instead, it relies on the borrower’s creditworthiness and promise to repay. Common examples include credit cards and personal loans. Because there's no collateral to secure the loan, lenders often assess your credit history and income more carefully, and interest rates may be higher due to the increased risk. If you fail to repay unsecured debt, lenders cannot directly seize an asset, but they can take legal action, like collections or judgments, to recover the money owed.