Do Secured Loans Affect My Credit Rating?

Secured loans can have both a positive and negative impact on a credit rating – like all loans. If you already have a poor credit rating, a secured bad credit loan could be the most suitable option for large amounts.

Like an unsecured personal loan, a secured loan will be reported to the credit reference agencies by your lender.

As long as you meet your repayments on time and in full, as agreed, your rating could improve.

• Your credit rating may improve if, as with all loans, your make your repayments on time and in full
• With a secured loan, as long as you meet your repayments, you’ll keep your asset which acts as security on the loan
• Secured loans are often used for large-scale amounts
• An asset for secured lending could be any item of sufficient value, such as property, a car, jewellery, artwork or business stock

Due to there being less risk involved for the lender, interest rates may be lower on secured loans than unsecured loans.

This could make repayments more affordable. Therefore, you could potentially improve your credit rating over time.

Defaulting on your loan payments will impact your credit score. You may also be charged late payment fees and, potentially, could lose the asset.