How to get Line of Credit

How to Get a Credit Line Card? 

Credit lines, also referred to as a line of credit, are a type of credit product where you have a pre-approved amount of money. You can use any amount from the pre-approved amount and will have to pay interest only on the part you use. You can also borrow direct cash from a line of credit

Let’s read on to know more about it and how it differs from a credit card and a personal loan. We will also read about the eligibility criteria and documents required to apply for a credit line.

Features of a Credit Line

Here are some features that make a line of credit unique -

How to Apply for Line of Credit?

Want to know how to get a line of credit? Well, you can apply for one both online and offline. Just follow these steps -

Documents and Eligibility for Credit Line

You have to meet the basic eligibility criteria and documentation requirement to qualify for a credit line. Here are some general eligibility criteria, which may vary based on the lender you choose -

You will have to submit your proof of identity, income, and address as documents. Which documents are accepted will again depend on your lender. 

Types of Lines of Credit

Let’s learn about the types of credit lines available in the market -

As the name suggests, this is for individuals and can be used for any personal or family related spends. 

This is extended to businesses and can be used for working capital, expanding, buying raw materials, machinery, etc.

Linked to a savings or current account, you are allowed to overdraw up to a certain limit. Overdrawing refers to withdrawing more amount than is present in your account.

This is utilized for bigger spends like home renovations or debt consolidation.

Credit Line Vs. Credit Card Vs. Personal Loan

Since these products are very similar, let’s understand their differences by a table -

Criteria Credit Line Credit Card Personal Loan

Access to funds

Immediate, as it is pre-approved

Funds also get available once you pay the amount you spent

Immediate

Depends on approval

Purpose

No limitations on end usage

Can be used for online and offline purchases

No limitations on end usage

Interest charged

Only on amount used

Based on spending

Pre-decided

Repayment

Can be paid in instalments or as a lumpsum

Paid in monthly bills, option of paying minimum due amount

Equated Monthly Instalments

Additional features

None

Rewards and benefits

None

Experience Rewards with Every Swipe

Conclusion

A line of credit is a good credit product as you have easy access to funds and yet don’t have to pay any interest as long as you don’t use the money. You can get a line of credit from any bank or leading NBFC. 

Frequently Asked Questions

No, even though they are both credit products, they are not the same. 

You can pay your credit line in instalments or as a lumpsum. To maintain your credit limit, you are required to make this payment with interest, insurance premiums (if applicable), and any other amounts relating to your account.
In order to qualify for a personal LOC, you will typically need a good credit history with no defaults, a credit score of 670 or higher, and consistent income.
All credit products are equally good or bad. If you take too much credit and don’t pay the EMIs on time, it is bad for your credit score and history. However, if you are responsible with your payments, you can build your credit score with credit cards or lines of credit.
Lines of credit (LOCs) are accounts that let you borrow money whenever you need it from a bank, up to a point. You can write checks or use your bank card to pay for purchases or withdrawals. Often referred to as bank lines or personal lines of credit, lines of credit are offered by many banks and credit unions.

Was this information useful?