Your Guide to Getting a Personal Line of Credit

Not all of us have money when we need it. For many, tapping into other resources is essential. Personal lines of credit can help.

A personal line of credit is borrowed money that gets paid back. But it’s not exactly a personal loan and not quite a credit card. Here’s what you should know about personal lines of credit and why you might need them.

What is a personal line of credit?

A personal line of credit is kind of a mix between a credit card and a personal loan. It lets you use as much or as little as needed, and then you pay back what you owe with interest.

A line of credit vs. a personal loan

Personal loans and personal lines of credit are similar but not quite the same. A personal loan is given out in one lump sum, while a line of credit is reusable. With a line of credit, you take out money when you need it and pay it back much like a credit card.

The amount you’re allowed to borrow for either depends on your credit. You might not get approved if you don’t have a good credit history. If you show your creditworthiness, you’ll be able to dip into your personal line of credit whenever you want.

A line of credit vs. a credit card

Credit cards are good for making purchases and earning rewards, while personal lines of credit are helpful when you need cash.

But getting a personal line of credit might not be as easy as getting a credit card since not all banks offer personal lines of credit. Check with your bank for details.

A personal line of credit is very much like a credit card in that it’s also a type of revolving credit. Credit cards usually charge a fee for cash advances, but a personal line of credit is made specifically for a cash advance.

Why would you need a personal line of credit?

You can use a personal line of credit for anything, including paying your utility bills or paying off your student loans. But affording a personal line of credit depends on your job and income.

The good news is that if you don’t have a regular income or if you earn commission, a personal line of credit can keep your finances balanced. To avoid falling behind on bills, a personal line of credit can help you cover emergency expenses or simply stay current on your bills.

Are you eligible for personal lines of credit?

Getting a personal line of credit requires a credit check. If you have good credit, this shouldn’t be a problem. But if you have poor credit, this isn’t going to work for you.

Since this is the only way you can qualify for a personal line of credit, you might not be able to get one if you can’t prove your creditworthiness.

Like a credit card, a personal line of credit has limits. So make sure you don’t “max it out” and use only what you need. You also might end up paying an annual fee.

Alternatives to a personal line of credit

Whether you’re looking to build credit or stay up to date on your finances, there are some alternatives to personal lines of credit you can consider.

Personal loans

If you need help paying off bills but can’t get a personal line of credit, a personal loan is a good alternative. Minimum FICO requirements are as low as 580 for some personal loan lenders, so poor credit won’t always hurt your decision.

Even if you think you won’t qualify for a personal loan because of your poor credit, there are options if your credit score is below 550.

Personal loans are helpful for paying off high-interest debt, as they tend to have lower interest rates than credit cards. So if you have a steady income and can pay off a personal loan, it’s worth looking into.

Credit cards

If you’re looking to boost your credit, you might consider getting a credit card. Credit cards are great for starting your credit journey or building your credit if it’s in a slump.

If you don’t have any credit at all, getting a secured credit card can help. A secured card lets you put down a deposit upfront, and that serves as your credit limit. So if you put $250 down, your credit limit will be $250.

To avoid getting hit with big interest fees, make sure to pay off your balance in full every month. If you find yourself unable to pay off the entire balance, at least make minimum payments. That way your credit score won’t suffer.

Take caution before taking out a personal line of credit

Before you decide if a personal line of credit is right for you, determine what you need it for and whether you can pay it back. A personal line of credit could benefit you, but always do your research to make sure it makes sense for your situation.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!

Lender	Rates (APR)	Loan Amount
1 Includes AutoPay discount. Important Disclosures for SoFi. SoFi Disclosures Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.365% APR to 13.365% APR (with AutoPay). SoFi rate ranges are current as of April 11, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.365% APR assumes current 1-month LIBOR rate of 1.88% plus 3.735% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org) 2 Important Disclosures for Citizens Bank. Citizens Bank Disclosures Personal Loan Rate Disclosure: Fixed interest rates range from 4.99% – 16.24% (4.99% – 16.24% APR) based on applicable terms. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
	7.73% - 29.99%	$1,000 - $50,000	Visit Upstart Check rate nowon SLH's secure site
	5.37% - 14.24%1	$5,000 - $100,000	Visit SoFi Check rate nowon SLH's secure site
	8.00% - 25.00%	$5,000 - $35,000	Visit Payoff Check rate nowon SLH's secure site
	4.99% - 16.24%2	$5,000 - $50,000	Visit Citizens
	5.99% - 35.89%	$1,000 - $40,000	Visit LendingClub
	5.25% - 14.24%	$2,000 - $50,000	Visit Earnest