What is a Line of Credit? – Use a Personal Line of Credit

A line of credit is basically a credit facility offered by a commercial bank or other such financial institution that allows the consumer to draw money on the facility as and when the consumer needs cash. The facility is usually for a specified time period at the end of which the consumer will have paid back the amount drawn, along with interest and fees. It is very similar to a loan, in that you would need to pay it back within a specified period. However, the major difference is that with a line of credit, the money can be spent as and when you want, while with a loan the power to spend is tied to the repayment of the loan.

To understand what is a revolving line of credit, it is necessary to understand how financial institutions provide these facilities. Basically, a financial institution may offer a line of credit to one or several customers. At the same time, multiple banks or financial institutions compete to extend credit to you. When you apply for a line of credit from a lender, it means that you are going to borrow a certain amount. In turn, you will be expected to repay the credit limit over a certain period of time.

When you apply for a line of credit, the rates vary, which can mean that you can opt for a higher interest rate or a lower interest rate. For example, if you are looking to obtain a two-year term, which would allow you to borrow an amount equivalent to two years of unsecured borrowing at a fixed rate, then a two-year term with a one percent introductory rate would be cheaper. However, if you are looking to borrow at a longer term of thirty years, which would allow you to borrow an amount equivalent to forty years of unsecured borrowing at a fixed rate, then a longer term with a zero percent introductory rate would be the better option. Conversely, if you do not require any deposit, then an unsecured one-year term with a two percent APR would be cheaper. So as you can see, the choice between an unsecured and secured loan is primarily dependent on your individual circumstances.

It is important to know what your credit score is in order to decide between an unsecured and secured loan. The free online revolving credit score can be found on the web and can be used to check your credit score, current credit line and borrowing limit. The higher the score, the better the credit score. You should also note that if you have a low credit score, then it may be difficult for you to obtain a line of credit.

There are various types of lines of credit that can help you out of financial trouble. One of these lines of credit are known as consumer credit cards. Consumer credit cards can be obtained with variable spending limits and repayment terms that can be useful in emergency situations.

Another type of lines of credit are home equity lines of credit. Home equity loans can be used by homeowners to pay off their mortgage or debt. This is especially helpful for homeowners who want to increase their monthly income. Borrowers can obtain a line of credit against their home without going through a mortgage company. What is a home equity line of credit used for? To pay off existing debts such as credit cards or loans, to make home improvements or to pay for medical expenses.

If homeowners take out home equity lines of credit (HELOCs), they will be able to take advantage of lower interest rates. HELOCs allow borrowers to use the money as they wish, whenever they want. However, to get the best deals in terms of lower interest rates, consider using credit cards, lines of credit can be used to consolidate all existing debts.

If you are a borrower in need of personal line of credit, the first place you should look is a local credit union. Credit unions offer a variety of lending options that can benefit borrowers. Many credit unions will loan money against your home and earn a profit from it. However, it is important to remember that the interest rate on a home equity line of credit will be higher than on a credit card or a line of credit from a bank. Before you borrow money from a local credit union, be sure to check their terms and conditions so you are sure you are getting what you really need.