Personal loans, also known as “signature loans,” are a form of unsecured debt that can be used for almost anything. Unlike secured loans that are backed by collateral — something of value the lender can repossess if you default on your repayment agreement — unsecured loans are only backed by your promise to repay the loan.
As a result, personal loan lenders rely heavily on your credit score and financial history to determine whether you’re capable of repaying the loan. Other factors such as your income and other debts may influence the amount the lender is willing to lend you and the interest rate it offers.
