I hear about it all the time but really don't know the difference between the two. Could you also give some examples of both? Thanks for the help!
2006-06-20 05:51:53 · 5 answers · asked by mageta8 6 in Business & Finance ➔ Credit
Secured credit is credit against something of value. Examples are a mortgage (your house as collateral) and a car loan (your car as collateral). If you don't repay the loan, the lender repossess the collateral.
Unsecured credit is credit extended to you with no collateral. Examples are credit cards.
2006-06-20 05:55:32 · answer #1 · answered by kja63 7 · 4⤊ 0⤋
Secured credit usually involves some collateral, such as money or liquid assets (stocks, bonds, real estate). For example a secure credit card would involve depositing $5,000 to a savings account where you cannot withdraw the money, and then getting $5k credit card to use (helps to build credit).
Unsecured credit is provided based on the previous reputation, FICO scores and other parameters. A regular credit card would be an example of unsecured credit - the bank didn't ask for anything from you when issuing the card.
2006-06-20 05:55:47 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Secured credit means that you have put up something as collateral...like a car or a house...something that they can take away from you if you do not pay. Unsecured credit is like a credit card or a hospital bill. If you don't make your payments then all they can do is take away your card and ruin your credit...but they cannot take away your property.
2006-06-20 05:57:20 · answer #3 · answered by Oblivia 5 · 0⤊ 0⤋
Secured Debts - Lenders place a lien on the asset, giving them the right to take the asset if you fall behind on your payments. If the lender has to take your asset because you can't pay anymore the asset will be sold. If the selling price for the asset doesn't completely cover the debt, the lender may pursue you for the difference. A mortgage and auto loan are both examples of secured debt. Your mortgage loan is secured by your home. Similarly, your auto loan is secured by your vehicle. If you become delinquent on these loan payments, the lender can foreclose or repossess the property. Unsecured Debts - lenders don't have rights to any collateral for the debt. If you fall behind on your payments, they don't have the right to take any of your assets. But they may try other options to get their money. For example, they will hire a debt collector to coax you to pay the debt. If that doesn't work, the lender may sue you and ask the court to garnish your wages, take an asset, or put a lien on another your assets until you've paid your debt. They'll also report the delinquent status to the credit bureaus so it can be reflected on your credit report.
I hope this helps
Jose
2014-08-25 09:53:20 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Secured credit- you have a credit card with a set amount of money already added to it. (daddy put 2K on the card) for you to spend.
Unsecured- traditional CC you can charge at will up to your limit but you will get a bill at the end of the month.
2006-06-20 05:55:40 · answer #5 · answered by JDINFLA 3 · 0⤊ 0⤋
Secured Credit is backed by either a savings, CD, or other investment insturment this could include a auto or home.
Unsecured is just backed by your signature. Like a personal loan.
2006-06-20 11:20:36 · answer #6 · answered by John H 4 · 0⤊ 0⤋
Unsecured would be credit cards loans with no collateral against them.
Secured loans are backed by something, (mortgage - underlying house) Auto loan - actual car.
2006-06-20 05:57:20 · answer #7 · answered by coolew01 2 · 0⤊ 0⤋
Secure Credit means there is some property or cash guaranting the loan. Unsecured means there is nothing behind it if you default, other than credit hassles..
2006-06-20 05:55:51 · answer #8 · answered by Anonymous · 1⤊ 0⤋
Secured credit means you put up your home as security - don't pay the money back and you lose your home. Unsecured credit means you don't put up your home as security - but they can still make you bankrupt and you still have to sell your home to pay them - it just takes a little longer to get the money out of you. But banks nearly always get their money back eventually, with interest of course. In the rare caes they don't - it doesn't matter. they pay savers 4.5% and charge 20% on credit cards and make massive profits - if a few fish get away - doesn't matter.
2006-06-20 05:58:17 · answer #9 · answered by Mike10613 6 · 1⤊ 0⤋
A secured credit card means you have to deposit money in order to be able to charge on the card. It's for people with bad credit but that need a card.
2006-06-20 05:55:21 · answer #10 · answered by Gatorz22 3 · 0⤊ 0⤋