What is a Line of Credit?
A line of credit is a form of revolving credit that is given to you by a financial institution. You are given a limit. You can borrow against the line of credit. For example, the credit limit is $9,000, and the balance is $2,000. Your available credit is $7,000. Once you pay off the $2,000 balance, you will once again have a $9,000 limit.
How Does a Line of Credit Differ From an Installment Loan?
A line of credit is a lot like a credit card. You are given a maximum that you can use. You only make payments on the amount that you borrow. An installment loan is money that is given to you in a lump sum. It can have a variable or fixed interest rate. A personal loan also has a fixed payment plan.
What can a Line of Credit be Used For?
A line of credit can be used for just about anything. Some people use it for emergencies. Other people use it to go on vacation or make repairs. Lenders typically do not put restrictions on what a line of credit can be used for.
Requirements for Getting a Line of Credit
You will need to have good credit in order to get a line of credit. You can get a line of credit even if you have bad credit, but you will likely have to pay higher interest rates. You will also need to have a stable source of income. You can visit Laddercredit.com if you are interested in applying for a line of credit.
The entire application can be completed online or over the phone. You have to be at least 18-years-old in order to apply. There is also a minimum income requirement that has to be met. Additionally, you must have a checking account in order to apply.
Benefits of Getting a Line of Credit
Flexibility is one of the many benefits of getting a line of credit. You can use it for whatever you need. Even though your credit score is one of the things that determines your credit limit, you will likely be able to get a higher credit limit than you would if you were to get a credit card. You have access to the credit limit as long as you make payments on time. Furthermore, you will be able to improve your credit score.