Secured debt, unlike unsecured debt, is a debt which is secured against some collateral (usually a house, although this varies). This means that in the event the debt is not paid back, the collateral can be used by the lender to recover the owed money.

In the case of loans, the item being purchased can usually be used as collateral against a default on the loan; for example, the house purchased with a mortgage is generally used as the collateral, as are cars in an auto loan.

A secured debt is generally the easiest way to obtain a large amount of money quickly, as lenders generally don’t loan a large amount of money based on word of mouth alone; however, just because you have something of value to put up as collateral does not mean your credit score will not affect you.

If you have a poor credit score you may have a very difficult time finding a lender willing to loan you the large amount you need. Remember, if you properly maintain your credit score and have a good credit score you’ll have an easier time finding a lender.

Tags: secured debt, debt management