Bad Credit Line of Credit
A line of credit is a flexible loan. If you take one out, you’ll be able to access money whenever you need to cover expenses. Lines of credit for bad credit often come with easy online applications and quick approval processes. Even if you have bad credit, this type of loan may be a good option for you. Let’s take a closer look at what a line of credit is and how it works so you can decide whether this personal loan is right for you.
How do lines of credit for bad credit work?
Lines of credit for bad credit let you borrow as much or as little as you want up to your set credit limit. Once you get approved, you’ll have access to funds that you can borrow from as needed. Then, you can either pay back the personal line of credit all at once or over time. With lines of credit, interest will begin to accrue as soon as you start taking out money. You’ll only pay interest on the amount you borrow.
Can I get a line of credit with bad credit?
If you’re interested in a line of credit but don’t have great credit, not to worry. Some lenders offer lines of credit for bad credit and will consider factors in addition to your credit score, like your income and employment history, when deciding whether to approve you. This means you might get approved for line of credit with poor or fair credit.
Can I get a line of credit online?
Borrowers can easily get a personal line of credit for bad credit online. Many lenders operate online, meaning you can fill out an application, get approved, and receive funding all from the comfort of your home. Online lines of credit for bad credit can make it easier for you to get the cash you need quickly.
Unsecured vs. secured lines of credit
Lines of credit for bad credit can either be secured or unsecured. With a secured line of credit, you have to provide an asset as collateral, like your home or car. Then, if you default on the loan, the lender can repossess the asset to recoup the loss. Unsecured lines of credit, on the other hand, are not guaranteed by collateral. This means you won’t risk losing an item of value you own if you can’t repay the loan.
What can I use a bad credit line of credit for?
You can use a personal line of credit for bad credit to cover any essential or emergency expenses. Many will use this type of flexible loan for an unpredictable expense, like a home improvement or repair project. You can also use a line of a credit as an added financial cushion to cover everyday expenses when you’re running low on funds, from groceries to bills.
Benefits of lines of credit for bad credit
There are several benefits of personal lines of credit for bad credit, including:
With a line of credit for bad credit, you won’t have to wait weeks or months to access your funds. Depending on the lender, you may receive the money the same day you apply, within 24 hours, or in a few business days. This is great news if you need funds right away.
Personal lines of credit for bad credit are a great choice if you’re unsure of exactly how much money you want to borrow. You’ll have access to funds that you’ll be able to pull from at any time during the draw period.
Only pay interest on what you borrow
Compared to other loans, a line of credit for bad credit is affordable. This is because you’ll only pay interest on the amount you withdraw. For instance, if your personal line of credit is for $2,000 and you borrow $500, you’ll only be responsible for interest on the $500.
Good credit not needed
Many lenders don’t require you to have a good credit score to qualify for a line of credit for bad credit. This means if you have bad credit or no credit, you may still get approved.
What you’ll need to apply for a line of credit
To apply for a line of credit from Advance America, you’ll need to provide the following items and information:
- Government issued ID
- Source of income
- Checking account
- Social Security Number or ITIN (in store only)
How to get a line of credit for bad credit
To get a line of credit for bad credit, follow these steps:
- Compare lenders: Shop around and look for lenders that offer lines of credit for borrowers with bad credit. Explore the interest rates, terms, and fees of each option.
- Choose a line of credit: Once you’ve shopped around, choose the right line of credit for your unique situation. Read the fine print before you move forward with the application.
- Fill out and submit your application: Fill out your application for a line of credit online or in person. You’ll likely need to share a few personal and financial details.
- Withdraw funds: If approved for a line of credit for bad credit, the lender will give you access to funds that you can use up to your credit limit. Do your best not to withdraw more than you actually need.
How does a line of credit for bad credit affect your credit score?
Here are some ways that getting a line of credit for bad credit can affect your credit score:
- Increasing 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.
- Making on-time payments: Payment history makes up about 35% of your credit score. By making consistent on-time payments with your line of credit for bad credit, your credit score can improve. Try to avoid late or missed payments, as these can bring down your score.
- Adding to your credit mix: Your credit mix accounts for about 10% of your credit score. 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.
Get an Advance America line of credit with bad credit
Advance America offers lines of credit to borrowers with a range of credit scores. You can easily apply online, and may get approved with bad, poor or fair credit. Then, you can withdraw funds as needed and will only pay interest on what you borrow. Visit Advance America today to learn more about lines of credit and other loans we offer.