***RG**BUK What is an unsecured debt consolidation loan? Unprotected loans are given without the backing of security, as such the lender bears more risk in case of default by the debtor. The applicants awarded these type of loans are typically viewed as posing lower default risk due to their good credit history. A broader look into the credit liquidating mechanisms clearly answers the question - what is an unsecured debt consolidation loan? On the other hand, consolidating one's loans entails financial transactions which allow a debtor to merge separate debts into one. This bears benefits in that the borrower handles only a single long-term repayment plan with lower monthly installments. In a bid to understand the credit functions of these two credit options, it is necessary to look at their characteristics in detail. Credit institutions routinely offer or advise their clients to consolidate their obligations as a means of ensuring repayment through renegotiation of terms. This role, however, is sometimes played by intermediaries who offer individuals their expertise. Ideally, the credit institution or intermediary offers an individual the ability to combine all of its debts, ultimately into a single loan with a longer repayment period but manageable monthly payments. This practice is widespread in many parts of the world, mainly because of rising household indebtedness especially due to rising property prices. Some banks also see it as a new growth segment for their retail banking operations. In particular, an individual or company must have a satisfactory credit score (at least 650) with an income sufficient to overcome the burden of their obligations in the course of the renegotiated period. Such unprotected debts can range from a few thousands to hundreds of thousands. Unprotected debts are generally used by consumers to buy household goods such as furniture, whereas major purchases like buying a house are normally secured. Lenders that offer borrowers unprotected debts do so at their own risk, by literally counting on their customer's promise to liquidate their obligations in full. However, lenders compensate this risk by making such credit advances less flexible and more expensive. Hence, they are best used for purchasing household goods which involve shorter repayment periods. Debts consolidated through financial institutions can combine unprotected and protected obligations. Although a mix of the same type of loans is also very common. There are additional areas of application for these credit mechanisms that best explain the question, "What is an unsecured debt consolidation loan?" These include Federal student refinancing which is typically accessed through the Department of Education.