How to Get a Personal Line of Credit

If you need to borrow money incrementally, such as for paying for contractors when you are having home improvements made, a standard loan may not be the best option for you. Instead, in such a situation, you would benefit much more from a personal line of credit. This is generally a loan that is used like a credit card, but you only pay interest on the amount of money you use on it. If you are considering this route, it’s helpful to know more details and about how to get a line of credit for yourself.

How Does a Personal Line of Credit Work?

With a personal line of credit, you can avoid overdrawing your checking account when your income isn’t regular or steady. It doesn’t require collateral but is based only on your credit history. Generally, you need good credit to qualify for this type of loan and require a minimum credit score of 680. With the line of credit, a lender will pre-approve you for a specific amount, but you don’t use the full amount immediately and instead access funds over time.

Additionally, the interest you pay on a personal line of credit is on the amount you use instead of the full amount. There is an APR and annual fee tied to the line of credit, much like with a credit card. You must also pay the fee, even if you don’t use available funds. However, one of the good things about this kind of loan is that the interest rates may be similar to or even lower than those for credit cards offered by banks.

You make payments on a personal line of credit similarly to those made toward a credit card. There are no set payments but minimums you are required to make.

How Do You Get a Personal Line of Credit?

In general, it is possible to acquire a personal line of credit from financial institutions like banks and credit unions. Depending on the institution, you may also be able to access the funds through checks, ATMs, Internet transfers or directly through a local bank or credit union branch.

To reiterate the credit score requirements for qualifying for a personal line of credit, you must maintain a good score of at least 680. Additionally, you need a good credit history. It’s important to check your credit score and credit report prior to applying, just to be sure you would qualify. It’s also wise to only apply for a personal line of credit when your financial situation is healthy.

Overall, a personal line of credit is a good option when you need access to more money and need to make installment payments. Make sure you research your options and ensure that you are qualified for this type of loan before applying.

Author: Richard Casteel

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Richard is the chief author of this blog. He worked as a financial advisor in money market form last 10 yrs. His financial sense in Share trading and any other trading is just outstanding. He just shares his knowledge and experience through this blog. You can contact him directly though

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