What is an unsecured personal loan?

Actually, a personal loan and an unsecured loan are the same thing, but providers use different names to describe the same product. A personal loan is sometimes described as an unsecured loan because it allows you to borrow money without having to provide security against it, such as your home or car. Instead, an unsecured (or personal) loans provider will base their decision on granting you a personal loan by using your personal credit history. This is verified by a credit check to determine your credit rating.

How does a credit check work?

The lender will use an approved credit reference agency to make a search on your name and address, and any previous addresses, which you give in your personal loan application. This credit check involves calculating your credit rating, which shows how risky it will be to give you a personal loan. Each time a credit check search is requested by a lender, it will be noted on your credit rating by the credit reference agency and detailed in any future credit checks. If you have had no previous credit issues, a credit check should be very straightforward and you should be eligible for the majority of personal loans.