It is still a collaterized form of money, i.e. money backed up by tangible assets
How is it, though? If I apply for a loan of $1,000, the bank simultaneously gives me a credit of $1,000 and a debit of $1,000. I get $1,000 of new money in my account to spend, whilst also having an outstanding bill for $1,000. Nobody gives the bank any assets to back up that $1,000 they have just created. No money or assets are added to their reserves. The only thing backing up my new $1,000 is a promise that I'll pay it back in the future.
So the second form of credit money is better for the economy because money gets created (and destroyed, for that matter) according to the needs of that economy.
Creating money out of thin air simply because there is a demand for individuals and businesses to have more money is neither good for the economy nor sustainable long term.