Bad-Credit Line of Credit

Qualifying for a conventional personal loan can be difficult with poor credit score. If you need emergency funding but are concerned about your credit history, consider a personal line of credit from Advance America.

A line of credit is a flexible loan that allows you to access money whenever you need to cover unexpected expenses. Bad-credit lenders often offer easy online applications, same-day approvals, and good approval odds for borrowers with poor credit who need to open a line of credit. So, even if you have a less-than-perfect credit history, a line of credit may be a viable option.

Let's take a closer look at this type of unsecured loan, how it works, and whether a personal line of credit is right for you.

How does a bad-credit line of credit work?

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 you're approved, you'll have access to a certain amount of funds that you can borrow from as needed.

For example, let's say you're approved for a $1,000 line of credit. You only need $250 right now to cover a bill, so you draw $250. You still have $750 that you can draw on at any time. So, need an extra $50? Or the remaining $750? You can draw from your line of credit as you see fit. Best of all, you'll only pay interest on the amount you borrow, 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 when you need it.

Can I get a line of credit with a poor credit score?

Yes, but you'll still need to meet certain eligibility requirements. What's more, you probably can't go through a traditional lender like a bank or credit union.

Direct lenders like Advance America can offer lines of credit to bad credit borrowers because we consider other factors in addition to your credit score. For instance, we look at your employment history, whether you have a steady income, and your overall debts when deciding whether you'll be able to repay what you borrow. As a result, your approval odds for a line of credit may be better with us than with traditional lenders.

Can I get a line of credit online?

Of course! Potential borrowers with bad credit can apply for a personal line of credit through an online lender. Many lenders either operate entirely online or offer online services in addition to their storefronts, meaning that you can fill out an online application, get approved, and receive quick funding without ever leaving home.

Plus, applying for a line of credit online streamlines the process, making it easier to get the cash you need quickly. In fact, if your online lender offers same-day funding, you may receive your first draw amount via direct deposit within hours.

Unsecured vs. secured lines of credit

Like many personal loans, a line of credit can either be secured or unsecured. With a secured line of credit, you provide some type of asset as collateral. This way, if you default on the loan, the lender can repossess the asset to recoup the loss.

Secured lines of credit commonly use a borrower's home equity or property value as the asset to secure the loan. This is called a home equity line of credit. Secured loans and lines of credit may be easier to obtain when you have bad credit because the lender knows they can seize the collateral if you fail to repay the debt.

In contrast, unsecured lines of credit are not backed by collateral, which means you won't lose an item of value if you can't repay the loan. However, you may find it more difficult to qualify for conventional unsecured loans and lines of credit if you have a poor credit history.

What can I use a bad-credit line of credit for?

Whatever you need! Having an open line of credit gives you access to extra money whenever you need it, allowing you to cover anything from daily essentials to major expenses. Many borrowers reserve this type of flexible personal loan for emergencies, such as an unexpected home repair or medical bills.

You can also use a line of credit as an added financial cushion to cover groceries or bills when you're running low on funds. Just remember that once you've reached your credit limit, you can't borrow more until you've paid down some of the debt.

Benefits of opening a line of credit with bad credit

Having a poor credit history can limit your access to conventional personal loans and credit cards. Fortunately, personal lines of credit offer several advantages compared to other types of bad-credit loans. Here are a few key benefits:

Quick funding

When you apply for a bad-credit line of credit, you won't have to wait several business days or weeks to access your funds. Depending on what time you apply, you may even receive your first draw the same day you're approved! In other cases, you may have access to your line of credit by the following business day.

Plus, since you’re already approved, you don’t have to wait each time you draw upon your available loan funds.


Personal lines of credit for bad credit are a great choice if you're not sure how much money you want to borrow. Unlike a personal loan or cash advance, an open line of credit gives you access to a certain amount of funds that you can draw upon as needed. It’s there when you need it!

Only pay interest on what you borrow

Compared to other types of personal loans, a line of credit can be more affordable because you only pay interest on the amount you withdraw. For example, if your personal line of credit is $2,000 and you borrow $500, you'll only be responsible for interest on the $500 until you withdraw 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.

What you'll need to apply for a line of credit

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 following items and information:

  • A government-issued ID (i.e., driver’s license, passport)
  • Proof of income (i.e., bank statements, paystubs, 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. Requirements may also vary depending on whether you apply online or in person.

How to get a line of credit with bad credit

Getting a line of credit with a bad credit score is easier than you might think. Here's what you need to do:

Compare lenders

Shop around and look for reputable lenders that offer personal lines of credit for borrowers with bad credit. Compare interest rates, loan terms, prepayment penalties, storefront locations, and customer reviews to make an informed decision.

Get ready to apply for the line of credit

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. Also, make sure you gather all the required documents and personal information needed to complete the application.

Complete and submit your line of credit application

Fill out your application for a personal line of credit 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, the lender will give you access to funds that you can use 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.

How does having a line of credit affect your credit score?

When you have bad credit, a line of credit may positively affect your credit score. For instance, opening a line of credit can:

Increase your available credit

Your credit utilization, or the total debts you owe divided by your total credit limits, accounts for about 30% of your credit score. A good rule of thumb is to keep your credit utilization ratio below 30%. Getting a line of credit can increase your available credit, which can lower your credit utilization ratio and increase your credit score. Just make sure you don't use more than 30% of your credit limit, since this can have a negative impact on your score.

Boost your payment history

Your payment history makes up about 35% of your credit score. By opening a line of credit, you have an opportunity to prove you can make your payments on time. When you make your monthly payments on time, your credit score can start to improve. But try to avoid any missed or late payments, as these can bring down your score.

Diversify your credit mix

Your credit mix accounts for about 10% of your credit score. That may not sound like much, but getting a line of credit for bad credit can add to the types of accounts you have on your credit report, which can improve your credit score. For example, if you only have credit cards and an auto loan, adding any type of personal loan diversifies the kind of credit you have on your credit report.

Get an Advance America line of credit with bad credit

Advance America offers lines of credit to borrowers with bad credit, fair credit, or no credit. What we look for is your ability to repay what you borrow, which means considering your employment, income, and current debts in addition to your credit history.

Apply now or stop by your nearest Advance America branch to learn more about lines of credit and other bad-credit loans available.

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.
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