What is a loan that is not backed by collateral and is based solely on the borrower's credit rating called?

A loan that is not backed by collateral and relies primarily on the borrower's creditworthiness is termed a personal loan. This type of loan is typically unsecured, meaning there is no asset that the lender can claim if the borrower defaults. Because personal loans depend on the borrower's credit rating, they are generally available to individuals with a good credit history, which reflects their ability to repay borrowed funds. The absence of collateral allows for more flexibility in terms of how the funds can be used, making personal loans a popular choice for various financial needs such as consolidating debt, financing large purchases, or covering unexpected expenses.