Secured Credit
Secured credit refers to a type of borrowing where the borrower provides an asset, known as collateral, to back the loan. This collateral can be anything of value, such as a car or home. If the borrower fails to repay the loan, the lender has the right to seize the collateral to recover their losses.
Common examples of secured credit include mortgages and auto loans. Because the lender has a lower risk due to the collateral, secured credit often comes with lower interest rates compared to unsecured credit, where no collateral is required.