Need to get your hands on some extra finances? A line of credit could be what you are looking for. Whether you are an investor or not, applying for a line of credit could do a lot for your cash emergencies. Most investors keep a line of credit not only for their emergencies but also as a way to have ready cash for unforeseen investment opportunities.
That said, applying for a line of credit is easier than ever before. Unlike in the past, applicants don’t even have to show up at the creditor’s physical location, you can apply online. You can apply remotely at the comfort of your couch. In this article, we shall define what a line of credit is, list the application guidelines, and compile the information needed to apply for a line of credit. Let’s dive in.
Table of Contents
What is a Line of Credit (LOC)?
A line of credit is a preset borrowing limit that a client can use at any time. This is a credit facility that is usually extended to clients by banks or financial institutions. The arrangement is such that the bank uses a client’s information, such as bank statements, etc., to establish the maximum loan amount a customer can borrow. Examples of lines of credit include:
- Personal line of credit (PLOC).
- Demand line of credit.
- Securities-Backed line of credit (SBLOC).
- Home Equity line of credit (HELOC).
- Line of credit application: Entry information
- You must be a U.S citizen.
- You must have a permanent address.
- Should operate an active email address for correspondence and statements.
- Must have a valid phone number.
- You must be of legal age as per the state law.
- Must be a resident of the state.
Based on your Circumstances, You Will Need to Include the Following Information:
- Your full name and the Social Security Number.
- Your income.
- Most recent tax statements (personal tax returns).
- Copies of pay stubs.
- Financial statements including credit references or vendors you have borrowed from and successfully paid off.
- Business registration documents.
- Details on any other properties under your ownership.
- Your credit history (credit score) – this covers your borrowing and the repayment history. The credit score ranges from 300 to 850. Higher credit scores are favorable in terms of you getting approved for the line of credit.
Steps TO Applying for A Line of Credit
Once you have compiled all the above information and documents, use the following guidelines to apply for your line of credit:
- Step 1: Identify a lender that offers a line of credit loan.
- Step 2: Finish the application online or reach out to the lender on the phone to process your application in real-time.
- Step 3: Select the loan amount you wish to request. (Here, remember that lenders base your credit limit on factors such as the state of residence, income, credit score, and your employment status).
- Step 4: Wait for your application’s approval. Once approved, funds get deposited onto your account, ready for withdrawal.
Applying for Credit
Circumstances happen that prompt us to look for financial support. This is where loans come in handy. But unlike traditional lending mechanisms, applying for a line of credit is much simpler. All you need to do is compile the information and documents mentioned above and then fill out the application online. Major banks use systems like Credit Sense bank lending software to manage credit applicants, so make sure you understand how these software apps work before jumping in and applying for credit. If you don’t have a history of bad credit, this should be a rather simple process. If you have bad credit, you will want to consider finding a credit bureau to help you repair your credit score.