Revolving Line Of Credit

How do revolving lines of credit work?

With a revolving line of credit, you can withdraw as much or as little as you’d like up to the maximum credit amount.

When you repay your balance plus interest, you’ll be able to borrow the principal amount you’ve repaid against the account again.

Types of revolving lines of credit

There are all types of revolving lines of credit, including:

Personal line of credit

A personal line of credit can allow you to withdraw money up to your max credit limit for a set period of time. You’ll only pay interest on the amount you borrow.

Home equity line of credit (HELOC)

A HELOC lets you get your home’s equity, which is your home’s current market value minus your mortgage balance.

Credit card

With a credit card, you can spend money up to the set max credit limit, repay it plus interest, and spend again. You can continue to use your credit card as long as your account is open and you’re in good standing.

How can a revolving line of credit affect my credit score?

A revolving line of credit can have a positive or negative affect on your credit. If you make your payments on time every month and keep your balances low, you can improve your credit score. If you miss a payment or default can hurt your credit.

Tips for using a revolving line of credit

If you use a revolving line of credit, consider these tips:

Borrow only what you need

A revolving line of credit can be good but don’t over do it. Borrow only what you need.

Make on-time payments

Once you withdraw money from a revolving line of credit, be sure to make your payments on time.

Pay more than the minimum

If you use a revolving line of credit, you willwant to repay more than the basic payment, this way you’ll save money on interest.

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