Non secured loans on the other hand are loans that do not require any collateral and are usually the type of loan that is sought most by individuals. Income and credit worthiness are the two main things that lending institutions go by when deciding whether or not to grant a non secured loan to someone.

To obtain non secured loans the borrower must have a good credit score. The lending institution will check the borrower’s credit score either through Experian, Equifax, or Trans-union; these are the three major credit bureaus that are used by lenders.

Sometimes the lender will only check one of the credit bureaus and use that score to determine the borrower’s credit score and some other lenders will use all three credit bureaus scores, average them all out, and use this average credit score as the borrower’s credit score. Besides the borrower’s credit score the lender will also check the borrower’s payment history on other loans that they have obtained in the past such as credit cards, auto financing, etc.

Lots of late payments on a borrower’s credit report will reduce their chance of obtaining a non secured loan but a borrower should never think that just because they have been late a few times on payments that all is lost. Lending institutions want to give borrowers loans because that is how they make their money. They will work as hard as they can to approve someone for a loan but sometimes they just cannot do it because there is just too much risk that the borrower will not be able to pay back the non secured loan.