Definition

1. Noun:
   • The maximum credit that a customer is allowed: A financial arrangement where a lender extends a specific maximum amount of money that a borrower can access and use as needed. The borrower only pays interest on the amount of money actually withdrawn, not on the entire available credit line.

Usage Examples

• Noun:
  • The bank approved a substantial line of credit for the small business.
  • She used her home equity to secure a line of credit for home renovations.
  • Managing a line of credit responsibly can help improve your credit score.

Advanced Usage

• "to draw on a line of credit": to withdraw funds from an available credit line.
  • The company will draw on its line of credit to cover the unexpected expense.
• "to have a line of credit in place": to have a pre-approved credit arrangement ready for use.
  • It's wise for a startup to have a line of credit in place for cash flow fluctuations.

Variants and Related Words

• Credit line (n): A common synonym for "line of credit."
  • He checked the available balance on his credit line.
• Revolving credit (n): A broader category of credit that includes lines of credit, where the credit replenishes as debts are paid.
  • A credit card is a common form of revolving credit.

Synonyms

• Credit limit: The maximum amount that can be borrowed.
• Credit facility: A formal financial arrangement for extending credit.

Related Phrases

• Open a line of credit: To establish this financial arrangement with a lender.
  • They decided to open a line of credit to finance the new equipment.
• Secure a line of credit: To obtain a line of credit, often by offering collateral.
  • The business secured a line of credit using its inventory as collateral.

Related Idioms

• A financial safety net: While not an idiom containing the target phrase, a line of credit is often described as one.
  • Their line of credit served as a crucial financial safety net during the slow season.

Noun

1. the maximum credit that a customer is allowed