Line of Credit

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Line of Credit Credit Score

Your credit score will affect the kinds of line of credit you can get and the amount of credit that you can receive.

Those with bad or poor credit will not be able to get many kinds of line of credit. Banks generally will not make cash lines of credit on checking accounts available to businesses with bad credit. Many lenders will simply not deal with those with bad credit.

Direct lenders will make lines of credit available to those with bad credit. Unfortunately they will charge a much higher interest rate on lines of credit to those with bad credit.

Persons with a low credit score will have to pay a higher rate of interest on a home equity line of credit. Most lenders determine the rate of interest on real estate equity lines of credit by the credit score of the borrower.

Why Your Credit Score is Important

Your credit score is a rating of your risk of not paying back loans or line of credit. It is compiled by the big three credit bureaus Equifax, Experian and TransUnion in the United States. The big three base the credit score on information about your past use of credit and bank accounts that is reported to them by financial institutions.

Those who have a history of not paying debts or having bank accounts closed will get a lower credit rating from the big three. The lower your credit rating the less credit you’ll be able to get. Persons and businesses that have a history of paying all their bills on time will get a higher credit rating and a good credit history.

Most lenders will base the line of credit they issue on a credit score and the borrower’s income. Some lenders will ignore a bad credit score if the borrower can demonstrate that they have income or cash flow. Equity lenders may also ignore a bad credit score if the borrower puts up sufficient collateral to secure the line of credit.

Take Control of Your Credit Score

It is possible for a person or business to take control of their credit score and make it more likely that they will get a line of credit. To do this a borrower will need a copy of their credit report.

The big three credit unions are required by law to send you a free credit report if you visit their websites. You can get your credit report sent instantly to you by going online.

Once you get your credit report look it over closely and see if there is any false or inaccurate information on it. Some experts report that most credit reports contain bad information because the big three are under no legal obligation to verify what’s in your credit report. One negative piece of information can make your credit score lower.

The big three are legally obligated to remove false or inaccurate information if you point it out them. If you see anything you know to be wrong on your credit report, you can get it removed. Removing a negative item from your credit record can increase your credit score.

Have a Good Credit Score

Your credit score affects the amount of credit that you can get and the lenders you can use. Maintaining a good credit score by paying your bills on time, paying off debts, not defaulting on debts and keeping your bank accounts from getting overdrawn can help you get more credit.

Anyone who plans to use lines of credit in the future needs to watch their credit score like a hawk.