Secured Debt
Debt backed by collateral — an asset the lender can take if you default. Mortgages (collateral: home) and auto loans (collateral: vehicle) are secured debts. Because the lender has recourse to the collateral, secured loans typically have lower interest rates than unsecured debt.
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Unsecured Debt
Debt not backed by collateral. Credit cards, personal loans, and medical bills are typically unsecured. If you default, the lender cannot directly seize your property (though they can sue and obtain a judgment). Unsecured debt generally has higher interest rates than secured debt.
- Mortgage
A loan used to purchase or refinance real estate, where the property serves as collateral. Mortgages are installment loans with terms typically ranging from 10 to 30 years. Missing mortgage payments can lead to foreclosure. Minimum credit scores vary by loan type (FHA: 500, conventional: 620).
Frequently Asked Questions About Secured Debt
What does Secured Debt mean?
Debt backed by collateral — an asset the lender can take if you default. Mortgages (collateral: home) and auto loans (collateral: vehicle) are secured debts. Because the lender has recourse to the collateral, secured loans typically have lower interest rates than unsecured debt.
Is Secured Debt important for my FICO® score?
Understanding Secured Debt helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.