The Tricks to Finding and Using a Line of Credit Responsibly - Baltimore Post-ExaminerBaltimore Post-Examiner

The Tricks to Finding and Using a Line of Credit Responsibly

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After a year of ups and downs, financial security is on many people’s minds. Having a line of credit in your back pocket is one way you can have that security. It acts as a safety net when an unexpected expense comes your way, and you don’t have any cash on hand.

Whether you’re looking at a bill right now or simply want to shore up your finances before one arrives, take a look at this guide. It will show you how to find and use a line of credit (LoC) to your advantage.

Go Online

If you take social distancing seriously, you may not feel comfortable lining up in a bank and speaking face-to-face with a financial advisor. Luckily, you don’t have to do this to get an LoC today. There are plenty of LoC lenders that operate solely over the Internet.

Online lenders underwrite and service these financial products over the web, meaning you’ll be able to apply, receive, and repay your LoC without ever leaving your home.

Check for a License

Location may not seem important as you’re browsing through your options, but it’s important to know where your lender operates. Although you may call Tennessee home, googling for an online LoC will generate results that include financial institutions that don’t offer online loans in Tennessee, the U.S., or even North America.

So, if you’re looking for a line of credit in Tennessee, make sure your lender is licensed to provide online loans in Tennessee. A license proves a lender has met your state’s lending laws.

Create a Strong Password

If approved, you’ll have a profile where you can review your agreement details, LoC balance, and other important details regarding your loan. This profile is a financial hub of confidential information, so you want to make sure it’s safe from prying eyes.

When creating a password, make sure you’ve never used it for another account before. It should also contain upper- and lower-case characters, numbers, and special characters.

Use it as a Safety Net

Once you have an LoC in your financial toolkit, forget about it until an emergency comes your way. Most online direct lenders recommend using an LoC as a backup in extenuating circumstances, like when one of your tires blows and you don’t have the savings to cover the repairs.

While it may work like a credit card, it shouldn’t follow you to the store, nor should you use it to pay for expected bills like rent, utilities, or groceries.

Pay More Than the Minimum Payment

If your emergency costs more than you’ll earn by your next paycheck. You won’t be able to pay off your balance as a result.

Luckily, the minimum payment is there to help. It keeps your account in good standing while costing a fraction of your full balance. You can rely on this minimum until you get funds together, but your aim should be to pay off as much of your balance as possible.

This habit comes with the following benefits:

  • You’ll be able to keep more of your LoC free for the next emergency
  • You’ll pay off your debt faster
  • You may reduce how much interest and finance charges you pay

There are a lot of LoCs available online, but not all of them are the right choice for you. Take the time to check for rates and terms before you lock in. And don’t forget the above tips. They’ll help you use your LoC to your advantage.


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