Wouldn’t it be nice if you have some funds you can tap in case you’re short of cash? You can use it to pay your credit card to avoid late fees and high interest, as well as settle your utility bill. In fact, you can use it for whatever reason you need extra money. This is the power of personal lines of credit. Its flexibility and convenience makes it an attractive type of loan. Qualifying for personal lines of credit, though, can be tough, especially if you have a bad credit history.
What Do You Need?
Personal lines of credit are a loan where the lender gives you a limit to spend. It can be as small as $3,000 to as much as $100,000. You can take everything at once or gradually. The most important thing is you don’t go above the limit and replenish your account. In other words, you pay your dues, which include the principal balance, interest, and other fees.
Because it’s a kind of loan, qualifying for personal lines of credit is no different from, say, getting a mortgage or a business loan. You will still need the following:
1. Good Credit Score
What is a good credit score? It actually depends upon the lender, but ideally, it should be between 700 and 800. You are lucky if you will find banks that accept a score of 600. Anything below than that falls between fair and bad.
You may be wondering why such scores matter. Getting it is a complicated process, but it involves critical factors such as your credit history. This one tells not only the debts you have but also your frequency and promptness of paying. The better you are with your repayments, the more likely you’ll get a high credit score.
For lenders like those that offer personal lines of credit, they value customers that know how to pay. It means they are responsible and are capable of keeping the business afloat. In turn, to make sure they don’t leave, they provide more competitive interest rates and better payment terms.
2. Source of Income
There are two reasons why lenders would check your source of income: they want to know how to fund your repayments and they like to check if your source of income is not fraudulent or illegal. Thus, you may have to present your payroll slip, certificate of employment, business permits, tax returns, etc., to serve as proof.
3. Bank Account
One of the advantages of the personal lines of credit is you don’t have to reapply your loans, which will take days, to get money. Rather, you can move it to your account and access it anytime and anywhere. Having a bank account with your lender can also be a good way to build your credit history.
Qualifying for personal lines of credit don’t happen overnight, more so if you have a poor credit score. You still need to work hard to raise it. But once you are accepted, you have less worry about your finances. This makes meeting the requirements worth it.
Qualifying for personal lines of credit is the first step to make most of its benefits. Learn what you should do to up your chances of approval at www.personallineof.credit.