Abstract: We study what secured and unsecured defaults reveal about borrower quality. An Indian policy experiment extended standardized unsecured loans to nearly all identified street vendors, including past defaulters. Secured-loan defaulters subsequently outperform unsecured-loan defaulters, while past repayers from both groups perform similarly. Neither credit scores nor original loan terms capture this distinction. Savings-account balances decline around default for both groups but recover only among secured defaulters, consistent with temporary liquidity shocks playing a larger role in their defaults. These findings suggest that secured borrowers are of higher underlying quality, consistent with signaling theories of collateral.