The most common type of loan today (especially from banks and traditional lending institutions) comes in the form of an unsecured loan – basically a loan that you can take advantage of without having to put up any collateral to “secure” that loan the first place.
Instead of putting any of your assets forward (or even just a little bit of cash) to lock down your lending package, borrowers instead are going to provide you a line of credit based almost entirely off your credit score, your credit history, and off of your income and financial situation.
Obviously, you’ll need to make sure that your credit score and history are in perfect shipshape before you go hunting for an unsecured loan – but you also need to make sure that you have the kind of income and cash flow necessary to meet your financial obligations with this kind of lending package, too.
Sometimes these loans are called “signature loans” because it’s just your signature – your promise to pay – that secures your lending package.
Credit cards are common types of unsecured loan you might be looking to take advantage of, even if they are traditionally thought of as “loans” in the first place. Student loans are usually unsecured as well, especially those that are available directly through the Department of Education.
All kinds of personal loans – usually including auto loans and mortgages – can be unsecured loans as well. This is where things start to get a little bit fuzzy, however, as you start to talk about the kind of dollar amounts that traditional lenders want a lot of extra security with before they finance anyone.
If your credit score isn’t picture-perfect you’ll have a tough time getting a mortgage or even getting a decent auto loan, so make sure those things are in order before you hunt for unsecured loan packages.