Definition

1. Noun:
   • A personal line of credit is a pre-approved borrowing limit extended by a financial institution to an individual customer. It is a flexible loan that allows the customer to access funds up to a specified maximum amount, repay, and borrow again as needed, typically with interest charged only on the amount drawn.

Usage

• A personal line of credit functions like a revolving credit account. You can use it for various personal expenses, such as home renovations or consolidating higher-interest debt.
• Unlike a term loan, you do not receive a lump sum. Instead, you have ongoing access to funds up to your credit limit.
• Interest accrues only on the portion of the credit line you have actually used, not on the entire approved limit.

Examples

• Noun:
  • She used her personal line of credit to cover unexpected medical bills.
  • The bank approved him for a personal line of credit with a $15,000 limit.
  • It's wise to have a personal line of credit for emergencies rather than relying on credit cards.

Advanced Usage

• "to draw on a personal line of credit": to access or withdraw funds from the available credit limit.
  • We decided to draw on our personal line of credit to fund the wedding.
• "to secure a personal line of credit": to obtain approval for one, often implying it is backed by collateral.
  • He secured a personal line of credit using his investment portfolio as collateral.

Variants and Related Words

• Line of credit (LOC): A more general term for any pre-approved credit facility, which can be personal, business, or home equity.
• Revolving credit: The category of credit that includes lines of credit and credit cards, where the credit replenishes as debts are paid.
• Credit limit: The maximum amount that can be borrowed under the line of credit.

Synonyms

• Revolving loan: Emphasizes the reusable nature of the credit.
• Credit facility: A broader financial term for an arrangement that supplies credit.

Related Phrases

• "Access your line of credit": To utilize the available funds.
  • You can access your line of credit via checks, online transfers, or a card.
• "Pay down the line of credit": To reduce the outstanding balance.
  • Their goal is to pay down the line of credit before the introductory rate expires.

Related Concepts

• Unsecured personal line of credit: A line of credit granted based on creditworthiness without requiring specific collateral.
• Secured personal line of credit: A line of credit backed by an asset, such as a savings account or home equity, often resulting in a lower interest rate.

Noun

1. the maximum credit that a customer is allowed