What is a Line of Credit?
A personal line of credit is a way to borrow money on an ongoing basis. It is sometimes called a bank line or credit line.
Unlike a traditional personal loan, you only pay interest on the amount you use, not the full credit limit. It works similarly to a credit card but typically comes with different interest rates and repayment terms.
Whether you need to cover unexpected expenses, manage cash flow, or consolidate debt, a personal line of credit offers a convenient way to borrow on your terms.
Why choose Integra Credit for a personal line of credit
At Integra Credit, we make the process of applying online for a personal line of credit fast and accessible:
- Integra Credit can help you access the credit you need with a straightforward application and quick decisions so you can check your options in minutes.
- Lines of credit have transparent terms, no hidden fees, and our dedicated support team is available to assist with any questions.
- Most applicants receive an instant decision; if approved, funds are typically deposited as soon as the next business day.*
How does a personal line of credit work?
When you apply for a line of credit, you can request a credit limit, which is the maximum amount you can borrow. Lines of credit differ from personal loans in that you don’t receive a lump sum but can access the available credit when needed.
Depending on the lender, you could access your credit by:
- Using a debit card issued by the lender
- Transferring to your bank via website or mobile app
- Withdrawing funds from a bank branch
With a personal line of credit, you pay interest on the amount you use, not the full credit limit, making it a cost-effective way to borrow. Lines of credit are often agreed upon over a set period of time.
Types of lines of credit
There are two main types of lines of credit available:
Secured line of credit
Some lenders offer a secured line of credit backed by assets like home equity, a certificate of deposit (CD) or other collateral. A common example is a home equity line of credit (HELOC), which lets you borrow against your home’s value.
As these loans are secured, they often come with lower interest rates. However, it’s important to understand the risks; according to the FTC, borrowers should understand missing payments could lead to default or even foreclosure.
Unsecured line of credit
An unsecured line of credit does not require collateral, making it a more accessible option for people without suitable assets or who don’t want to risk them.
Lenders typically charge higher interest rates because there is no security backing the loan, offsetting the risk. However, this also means you don’t need to own a home or other valuable asset to qualify.
Benefits of an unsecured personal line of credit
An unsecured personal line of credit offers several benefits for people who need to access funds quickly and conveniently.
- No collateral required: An unsecured personal line of credit does not require you to stake any assets against the loan balance. You do not need to own a home, CD, or other assets to use as collateral. This makes them more accessible than secured loans.
- Speed and convenience: The online application process can be quick and straightforward, and you can get a decision within minutes. This compares favorably to waiting weeks to get a decision from a traditional bank branch.
- Flexibility: The lender will set a minimum payment based on the amount borrowed, and you can choose to repay more to lower the total interest paid. Some lenders may even increase the credit limit once you consistently make your payments on time.
- Cost-effective: The lender will only charge interest on the amount borrowed, not the entire credit line. You can withdraw the cash you need and leave the rest of your balance available for future withdrawals.
What can you use a line of credit for?
A personal line of credit is an ideal solution if you don’t know exactly how much money you will need to cover unexpected bills or essential expenses. Here are some examples of when you might consider a line of credit.
Cash flow fluctuations
A personal line of credit can be a helpful safety net when cash flow is tight or unpredictable.
Whether you’re facing an unexpected bill before payday, covering essential expenses like groceries or utilities, or managing fluctuating income, having access to flexible funds can help.
Emergency expenses
Emergencies can happen anytime, and in most cases, they can’t be put off. If you have a medical emergency or an urgent repair that needs immediate attention, you could face an unexpected bill that you need to pay.
If you don’t have the savings to cover these costs, a personal line of credit’s flexibility lets you access what you need and leave the rest of the balance untouched.
Home Improvements
Some home improvements can add value to a home, but it’s difficult to predict the exact cost when planning the project. A line of credit will give you access to the cash you need to fund home improvements.
Alternatives to personal lines of credit
If you need to borrow money, several other options are available. Here is how personal lines of credit compare to other common loan options:
Credit cards
A personal line of credit works similarly to a credit card. You have a credit limit and can borrow as much as you like until you reach it.
However, most credit cards only let you borrow small amounts of cash and primarily focus on spending. They will also typically charge more for cash advances than they do for purchases.
A personal line of credit can provide cash directly to a bank account without an increased interest rate, which means it can be more flexible than credit cards.
Personal loans
A personal loan does not offer revolving credit. Instead, you receive a fixed sum and make fixed payments until you have repaid the balance.
Typically, the lender will spread the interest across all payments. With a line of credit, on the other hand, you can withdraw only the amount you need to borrow.
A personal loan might suit borrowers who know exactly how much money they need for a one-time expense, like a wedding, or to consolidate debt.
Secured loans
A secured loan requires collateral, like your home or vehicle, to back it. Because the lender has an asset to recover if you default, these loans often come with lower interest rates and higher borrowing limits compared to unsecured options.
However, the biggest risk with a secured loan is that failure to repay could result in losing the collateral, such as foreclosure on a home or repossession of a car.
While a secured loan may be a good option for those with valuable assets and strong repayment confidence, a personal line of credit provides flexibility without putting your property at risk.
How to apply for a personal line of credit
Applying for a personal line of credit with Integra Credit is fast, simple, and completely online.
To get started, you’ll need to provide some basic information, including:
- Your name, address, and Social Security Number
- Your income details
- Your checking account information
Once you submit your application, you’ll receive an instant decision. If approved, you’ll get a clear breakdown of your credit limit, interest rates, and repayment terms to make an informed choice.
You can check your eligibility without impacting your credit score. Once you accept your offer, funds can be deposited into your account as early as the next business day, depending on your financial institution.
Personal line of credit FAQs
How do I access the balance on a personal line of credit?
Most finance companies that offer personal lines of credit make the process of withdrawing funds fast and convenient.
Lenders can typically deposit the money into your checking account within one business day*.
Can I get a personal line of credit with bad credit?
When you apply for a personal line of credit, lenders can consider factors other than your credit score to get a complete picture of your financial health.
Many lenders consider factors like your employment history, income, and bank account transactions. If you need a line of credit, bad credit may not prevent you from getting the funds you need.
Can I get a line of credit with no credit check?
Many lenders perform a credit check to assess your eligibility for a personal line of credit. If your credit score is low or you haven’t built up a credit record, it can be difficult to be accepted.
However, some lenders offer no-credit-check loans, including lines of credit. They look at other factors, including your employment and income, when deciding whether to offer you a line of credit.
Can I get a line of credit with instant approval?
Many lenders offer quick decisions on line of credit applications, even if you have poor credit. Most applicants can get a decision within minutes of submitting their application.
Can a personal line of credit help my credit score?
How a line of credit affects your credit score depends on how well you manage it. Keeping up with your minimum payments and staying within your credit limit can help improve your credit over time, but missing payments or defaulting on the loan can negatively affect your score.
It’s also worth noting that when you apply, the lender may perform a hard credit check, which can cause a temporary dip in your score. Your credit score will only be affected if your lender reports your repayments to the credit bureaus. If they don’t, it will not affect your score.
How much can I borrow with a personal line of credit?
The maximum line of credit limit available can vary significantly depending on the lender. Limits can typically range from a few hundred dollars to tens of thousands.
