What is an Unsecured creditor?

Unsecured creditor is a person or a financial institution which gives out credits with out requesting anything to be put up for collateral. These type of loans are more risky and they usually have a bigger interest rates then the ones which have collateral put up. If the borrower happens to default on his payments then those creditors will get payed which had secured loans with the borrower in question.

You can only get an unsecured loan only if you have a valued customer of a bank or you have a credit score which is high and your credit history is the best that it can be. Usually for collateral people have to put up a house or a car to obtain a fairly good loan with low interest rates.