Lines of credit can give you flexible access to money up to your credit limit. But if you have poor credit, you may be wondering if you can get approved for this type of loan. Luckily, many lenders have lenient credit score requirements and will consider factors in addition to your credit score when deciding whether to approve you. So, lines of credit can be a good option for borrowers with poor or fair credit. Let’s dive deeper into how lines of credit for poor credit work and how to apply.
How lines of credit work
A personal line of credit is a flexible loan that lets you borrow up to a certain amount. Unlike a personal loan, you don’t need to take all the money at once. Use what you need and pay back what you borrowed plus interest either all at once or over time. Lines of credit can help you pay for unexpected expenses, fund a project like a home repair, or even just give you extra funds that you can draw from as needed.
Lines of credit typically come with easy applications and quick approval decisions. Once approved, you should have access to the funds whenever you need them. With lines of credit, you’ll only pay interest on the amount you borrow.
Do I need a good credit score to qualify for a line of credit?
You may not need a good credit score to qualify for a line of credit. Many lenders will consider factors in addition to your credit score when deciding whether to approve you, like your income, employment history, and current debts. This means that you can still qualify if you have poor or fair credit. Just keep in mind that interest rates may be higher for borrowers with lower credit scores.
How to apply for a line of credit
Here’s how you can apply for a line of credit:
- Gather all necessary documents and information. This may include proof of income, a bank statement, and a state ID, driver’s license, or passport.
- Fill out and submit your application. Many lenders offer online applications, so you may be able to apply from the comfort of your home.
- Wait for approval. You may find out whether you’re approved for a line of credit instantly or within a few minutes, depending on the lender.
- Receive the funds. If approved, the lender may deposit the funds into your bank account either the same day you apply, within 24 hours, or in a few business days.
The bottom line
A line of credit may be a better option than a loan if you want the flexibility to borrow money as needed. They can also be easier to get than you might think. To make the right choice, research your options and compare loan terms, interest rates, and other fees. Then, make sure you have a repayment plan ready so that you can pay back the line of credit on time.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.