There are many kinds of loans from car loans, to mortgages, payday loans, personal loans, credit cards, and dozens of others in between. But, in the end there are just two kinds of loans: secured loans, and unsecured loans.
A secured loan is "secured" by collateral. In other words, if someone doesn't pay, then the lender is legally permitted to take something in exchange for non-payment.
An unsecured loan has no collateral. The lender's only recourse in the event of non-payment is continued attempts at collection.
Secured loans include mortgages, car loans, and home equity loans.
Unsecured loans include student loans, credit cards, and personal loans.
Generally speaking, secured loans have lower rates than non-secured loans.
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It Is All About Credit
- Detailed Information About Credit Reports
- How Many Credit Cards Do You Need
- Is my-FICO worth it?
- Get a No-Strings Free Credit Score
Credit Report and Credit Score
Your credit report and credit score go hand in hand.
Your credit report is the file that is kept about your credit history by one of three major credit bureaus.
Your credit score is a computerized number generated from your credit report.
The purpose of a credit score is two-fold. One, is to allow a trained monkey to be able to approve credit for your without actually having to read and understand your credit report. Two, is to allow loans to be sold to investors by standardizing the risk the loans represent via the credit score number.
Understanding your credit report and credit score are very important to getting the best value for your finances.
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Should I Pay Off My Mortgage
Answer to one of the frequently asked questions of the Finance Gourmet in his life as a financial planner. Click here to see Should I Pay Off My Mortgage