In today's credit-based economy, anything is possible. If you ever want to secure financing for a property or a personal loan to cover living expenses, or even if you simply want to place your meal on a credit card you are likely to need a creditor to grant you a credit line. Some options include getting a personal loan from a friend or family member, or contacting your bank for credit.

In terms of credit line, you will need to demonstrate that you are deserving of it. The three-digit number that reflects your creditworthiness is critical to your financial well-being. If it comes to handling a small business, keeping a healthy flow of cash on hand is indeed necessary. As a result, many business owners prefer a line of credit to boost their financial position.

The credit line facility started in the world of commerce, but it is now available in consumer finance too. You might have a credit card, that is a line of credit agreement that a bank has offered, and requires regular monthly repayments to keep it current. If you miss your minimum payments, your credit line falls into default and charges are applied.

How Useful Is a Credit Line?

1. Instant access to cash is made possible via a credit line. Lines of credit may often be approved in as short as 24 hours, which is much faster than other forms of credit. Albeit with bigger credit lines, processing is a few days and can require several pieces of paper documentation to support your application.

2. So long as you don't go over your credit limit, you get near limitless options for what you may purchase. The funds from your credit line may be used to buy a car or a computer. Anything from large purchases to small essential items can be bought on credit, and as long as you keep up repayments, even just the minimum payments, you have the full value of your credit line available to you. A lot of individuals put their funds into it so that they may go on trips or put money into home improvements.

3. Having an emergency fund comes to the rescue on many occasions. In the Philippines it is common to not be allowed into a hospital without evidence that you can afford the services, and even more common not to be allowed to leave the hospital without paying the bill. No cash? Get a credit line to make sure that you can cover the bills now, and repay it later. Having an emergency fund can rescue you from this sticky situation.

4. A credit line is a loan from which you pay interest just on the funds actually drawn. Considering the lending company’s policy, one may be eligible to reduce the deficit without a charge. In contrast to a term loan, where you get a set quantity of money and are required to make consistent payments, a line of credit may be drawn upon as needed. You return the cash as you use them, and you only pay interest on the amounts you draw.

You can be approved for an affordable amount, like your total salary amount, or a percentage of your salary amount, which is available for you when needed. Let’s say that your salary is around P50,000. You clearly can not afford to borrow the full P50,000 in one go, since you have rent, bills and other expenses to pay, but you might be able to afford P25,000 or P30,000 of it, depending on your personal circumstances.

Firstly, draw down what you need, pay some of it back and draw down more when it is needed. Only draw when needed, so that you can always afford the minimum repayments, or you can afford to pay it off in full.