What are common collateral items? Common items that are used as collateral for a bad credit secured loan include items like automobiles and real estate, though precious jewelry or other items are also used from time to time. When using an automobile or piece of real estate, person seeking bad credit secured loan is often able to keep their car or house; they simply turn over deed or title to finance company or other lender who is then granted a legal claim to it until loan has been repaid.

What is bad credit, anyway? Obviously, if you fall behind on payments or make all of your payments late then it's going to reflect badly upon you. New lenders aren't going to want to offer you lines of credit or financing for purchases, and will instead try to make you pay up front for everything that you buy. This is scourge of bad credit… which means that your past late payments or non-payments have been reported to a credit agency, and they have lowered your credit score as a result. The lower your credit score is, more of a risk lenders view you as… which is why it's so hard to get new credit lines once your credit is bad. Unfortunately, this also can make it much more difficult to improve your credit rating… after all, if you can't get credit then how can you show that you're much better with payments these days?