Personal Line of Credit is essentially a Personal Loan with the freedom of a credit card! You are provided an amount in a Line of Credit Loan and you are approved of the entire amount in one go, but you need to pay only for that much you have used.
An unplanned vacation or home renovation where you need to pay the contractors in a discontinuous fashion are perfect examples where a Line of Credit suits best.
How it Works:
In this a Credit Line is provided by lenders for a pre-approved amount. It is however, different from conventional loan in the sense that you don’t have to utilize the entire money in one go. You can use this amount as per your needs and wants. The funds can be accessed any number of times within the timeframe. The good part is you will be paying interest only for the amount consumed and not for all of it.
Credit Score Requirements:
Many things depend upon your Credit Score. Particularly the interest that you are going to pay for the Personal Line of Credit. As a matter of fact it is the only factor at the time of your approval of the loan. To bag a good deal you will need a good Credit Score.
Please mind one thing that using the amount entirely reflects upon your credit score negatively as a Personal Line of credit affects your credit score in the form of revolving credit.
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Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.