Personal Unsecured Line of Credit

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A personal line of credit is essentially a loan, and much like a credit card account that is accessible without having to use a card. You are able to write checks or request transfers to your checking account online or by phone.

A personal unsecured line of credit may have the capacity to see you through both expected and unexpected life transitions, from throwing the wedding of your dreams to covering an out-of-the-blue appliance breakdown. In the cycle of financial ups and downs, taking advantage of an unsecured personal line of credit might be an option when your money situation is in the sweet spot.  Personal unsecured lines of credit can be used for paying off a variety of investments in your future, from  education costs to medical care, home improvements or car repairs.

The amount available could vary, based on both the lender and your personal situation. Different financial institutions have different procedures, but in general an unsecured line of credit allows you to access the money as needed by writing a check from a special account or by requesting a transfer to your personal checking account online, in person, by phone or at an ATM.

Banking Basics
Checking your credit report and score before you approach your bank, credit union or other lender can help prepare you for the application process. If you’ve encountered some bumps in the road, you’ll be armed with up-to-date information and ready to explain how you’ve turned the situation around. . You may want to get your three credit reports for easy reference to any details that the lender may want to discuss.

Common Criteria
As with many loans, bank guidelines for securing the loan are likely to include a review of your outstanding bills, current and projected earnings and income potential. Your payment history may also be considered in the application process. On your end of the dialogue, it can help to ask questions about effective annual interest, late fees, upfront fees and any other charges for the product.

Credit Considerations
Before you sign the dotted line with any loan, take time to understand the terms and conditions of the loan you are being offered and make sure you aren’t taking on debt that you can’t handle. Remember, how you handle the responsibilities of making your payments -can greatly impact your credit score.

About the Author
Cyndi Perkins is an award-winning newspaper editor, columnist and reporter. Beginning her career in the 1980s, she has covered business, gardening, health, fitness, travel and parenting for international, national and regional publications.