Man searching online bad credit line of credit options

Line of Credit for Bad Credit

Qualifying for a traditional personal loan can be difficult if you have a poor credit score. If you need emergency funding but are concerned about your credit history, you might consider a personal Line of Credit from a direct lender like Advance America. 

How does a Line of Credit for bad credit work? 

A Line of Credit is a type of flexible loan you can use for a wide range of expenses. Depending on your lender, they may not require a credit check or consider factors beyond your credit score. 

Opening a personal Line of Credit for bad credit can give you access to money whenever you need it — up to a set credit limit. Once approved, you'll have access to a pre-determined amount of funds you can borrow from as needed. Plus, you’ll only pay interest on the amount you use, not your total credit limit. 

At Advance America, you can pay back the amount borrowed from your personal Line of Credit all at once or over time. There are no prepayment penalties, and your Line of Credit stays open even if you repay what you borrowed, so it's there for you the next time you need it. 

How to get a Line of Credit for bad credit 

Getting a Line of Credit with a bad credit score might be easier than you think. 

Compare lenders 

Shop around for reputable lenders offering personal Lines of Credit. If you have bad credit, look for lenders who consider factors beyond your credit score, such as your income and employment history. Compare interest rates, terms, fees, and reviews to make an informed choice. 

Gather the required documents 

Once you've compared your options and decided on a Line of Credit, read the fine print. You need to know all the details before applying so you know what to expect. 

To apply for a personal Line of Credit with bad credit, you'll need to provide proof of your identity and your ability to repay the amount you borrow. Many lenders that offer bad credit loans require some or all of the following: 

  • A government-issued ID (i.e., driver’s license, passport)
  • Proof of income (i.e., bank statements, pay stubs, tax returns)
  • Checking account
  • Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) 

Since state laws vary, you'll want to check with your lender for a list of required documents. 

Submit your Line of Credit application 

Fill out your application online or in person. In some cases, you may have to specify your first draw amount in the application. Before hitting the submit button, review the information you entered to check for accuracy. 

Receive your first draw amount 

If you're approved for a Line of Credit with bad credit, you’ll receive your first requested draw amount, and the lender will give you access to funds up to your credit limit. It's important to never withdraw more than you need so you won't have trouble making your monthly payment or repaying the balance. 

Get started with a Line of Credit

Types of Lines of Credit 

There are typically three different types of credit lines to choose from: 

Personal Line of Credit: An unsecured loan that doesn’t require collateral. Approval and credit limits are based on factors like your credit score, income, and employment. 

At Advance America, we also consider your income and state regulations when reviewing applications. Once approved, funds can be used for anything, from medical bills to home renovations, utilities, and more. 

Apply for a Line of Credit today

Home equity line of credit (HELOC): While most Lines of Credit are unsecured, a home equity line of credit (HELOC) is secured by your home. The amount you can borrow depends on your home’s equity — the difference between its value and what you owe. 

HELOCs are ideal for large, ongoing expenses like home improvements or medical bills and typically offer higher limits than personal Lines of Credit. However, they come with costs like closing fees and the risk of losing your home if you can’t repay. 

Business line of credit: An unsecured loan for business owners, allowing borrowing limits of up to $250,000 or more. Funds can be used for expenses or business growth, with loan size depending on your business's value. While it can boost short-term sales, high interest rates can make repayment challenging. 

Unsecured vs. secured Line of Credit 

A Line of Credit can be secured or unsecured. With a secured Line of Credit, you provide collateral, like your home or another asset, which the lender can take if you fail to repay. For example, a HELOC uses your home equity as collateral, making it easier to qualify, especially with bad credit. 

Unsecured Lines of Credit don’t require collateral, so you won’t risk losing assets if you can’t repay. However, they may be harder to qualify for, particularly if you have a low credit score. 

Can you get a Line of Credit with a bad credit score? 

While banks and credit unions may not offer Lines of Credit to bad-credit borrowers, direct lenders like Advance America often do. Bad credit doesn’t automatically disqualify you because we consider other factors, such as employment and income, when evaluating your application. 

➢RELATED: How to Improve Your Credit Score

Can you get a Line of Credit for bad credit online? 

Yes, you can apply for a personal Line of Credit online, even with bad credit. Many direct lenders operate online, allowing you to apply, get approved, and receive funding from home. Online applications streamline the process, and with same-day funding, you can receive your money via direct deposit within hours. 

What can a bad-credit Line of Credit be used for? 

A bad-credit Line of Credit can be used for anything you need, from daily essentials to major expenses. It also serves as a financial cushion for things like groceries or utilities. Just keep in mind you can’t borrow more once you’ve reached your credit limit until you pay down some of the debt. 

How does having a Line of Credit affect your credit score? 

When you have bad credit, a Line of Credit could affect your credit score. For instance, it could: 

Increase your available credit 

Getting a Line of Credit can increase your available credit, which could lower your credit utilization ratio and potentially increase your credit score. Just make sure you don't use more than 30% of your credit limit since doing so can have a negative impact on your score. 

Boost your payment history 

Whether or not you can repay your debts on time plays a massive role in your credit score. In fact, it makes up 35% of your total score! Anytime you draw money from your Line of Credit and repay it on time, it helps your score if the lender reports your payment history to the credit bureaus. 

Diversify your credit mix 

Your credit mix accounts for about 10% of your credit score. As such, if you haven’t applied for a Line of Credit before, applying for one could diversify your credit and give your score a boost. 

Is a personal Line of Credit right for me? 

A Line of Credit can be a great source of emergency funds when you need them most. Like any type of loan, credit lines aren’t a fix-all and may not be right for you. You might consider one if you: 

  • Need more money than you can receive with another type of personal loan, such as a Payday Loan or an Installment Loan.
  • Need access to ongoing funds for the next several months or years.
  • Prefer revolving funds that you can access whenever necessary, up to your credit limit.
  • Have an upcoming home renovation or other large, recurring expense. 

Key benefits 

Personal Lines of Credit offer several advantages compared to other types of bad-credit loans. These can include: 

Quick funding 

Whether you apply online or in store for a Line of Credit, you can get approved within minutes. At Advance America, if your application is approved before 10:30 AM EST, you may even receive your funds the same day! 

Flexibility 

A Line of Credit for bad credit is more flexible than traditional loans. You can access it at any time or leave it sitting when you don’t need it. 

Could be better than a credit card 

Although they can have stricter eligibility requirements, depending on your lender, Lines of Credit may have higher credit limits and lower interest rates than credit cards. 

Only pay interest on what you borrow 

With a Line of Credit, you only pay interest on the amount you withdraw. So, if your credit limit is $2,000 and you borrow $500, you'll only be responsible for interest on the $500 until you draw more. 

Good credit not needed 

Many lenders don't require you to have a minimum credit score to qualify for a bad-credit Line of Credit. So, even if you have poor credit or no credit at all, you may still get approved based on other factors like your employment and income. 

Get an Advance America Line of Credit for bad credit 

Advance America offers loan options to borrowers with bad credit, fair credit, or no credit. Apply now or stop by your nearest Advance America store to learn more about personal Lines of Credit and other personal loan options.

Notice: Information provided in this article is for informational purposes only. Consult your attorney or financial advisor about your financial circumstances.

Jalin Coblentz headshot About the author

Jalin Coblentz has contributed to Advance America since 2023. His experiences as a parent, full-time traveler, and skilled tradesman give him fresh insight into every personal finance topic he explores.

The Advance America advantage

Since 1997, Advance America has helped millions of hardworking people with a variety of financial solutions including Payday Loans, Online Loans, Installment Loans, Title Loans and Personal Lines of Credit.
157+ million
loans issued
800+ stores
and online loans
25+ years
providing loans