Cross collateralization isn't inherently bad, but it does carry some unique risks. It means that if you have a problem repaying one debt or obligation, the lender can tap into or seize the cross-collateralized asset—like taking funds from your checking account to pay a credit card bill. It can also tie up the resale of assets: For example, a lender might stop you from trading in your car, even though you own it free and clear because it's serving as collateral for another loan. Finally, cross-collateralization could negatively affect your ability to get new financing because so many of your assets have "strings attached" to them.