Secured credit generally refers to credit that requires you to pledge something of value in order to secure a loan. In banking terms, it is called collateral . By contrast , an unsecured loan or line of credit doesn’t require any collateral .
These are the most common types of credits . They are not secured by collateral . That means that unlike secured loans , such as mortgages or auto loans , unsecured credits are not directly connected to property that a lender can seize if the borrower fails to pay .