Unsecured loans are generally the most straightforward types of loans. A bank (or another lender) will lend a sum of money to an individual at a certain rate of interest, to be paid back at regular intervals (usually monthly) over a set period of time, until the debt (including any interest accrued) has been repaid.
Instead of using collateral (eg a home), unsecured loans tend to be made on the basis of an assessment of the affordability and reliability of the borrower. The lender may ask for proof of a regular monthly salary and will carry out a credit check when deciding whether to make a loan to a certain individual and to calculate the maximum amount they are willing to lend etc.
Credit scored and defaults are then used to determine an individual's suitability for a loan. For information read Credit scores and defaults.