If a borrower defaults on an unsecured loan, their credit score will take a big hit and the effects will be long-lasting. A loan default can remain on a borrower’s credit report for up to 10 years. The lender may also accelerate the loan’s repayment, meaning the entire balance will be due immediately in the form of a balloon payment. If the borrower fails to make the full repayment, their debt may be sold to a collection agency.