July 28, 2025
Whether you’re planning renovations for your home, fixing your vehicle, or funding a big move, you may not always have cash on hand to get the job done. That’s where a personal line of credit can come in clutch.
This flexible credit can be used as needed, making it simple to borrow funds when you’re in a bind and make repayments over time. Read on to learn more about what a personal line of credit is and why it might be a good next step in your financial journey.
A personal line of credit is a type of revolving credit. This means you can draw from your credit line, repay, and reuse the funds as many times as you need, for whatever you need. You can use your credit line just like cash, so you can allocate the funds toward unexpected medical bills, paying down high-interest debt, and anything else as you see fit.
A personal line of credit is also usually unsecured, meaning the lender doesn’t require you to put up collateral (an asset such as the title to your vehicle or home) as an assurance they’ll be repaid. Of course, collateral or no collateral, it’s always important to repay your personal line of credit on time. Missed payments are typically reported to the three major credit bureaus and will stay on your credit report for up to seven years. This can negatively affect your credit score and potentially make it harder for you to borrow money in the future.
Personal lines of credit function much like a credit card. Once you’re approved, your lender will assign a credit limit based on factors such as your credit score, income, and employment history. And you can borrow as much as you need up to that limit. So, for instance, if you have a credit line of $1,500 and have only used $500, you can still draw on the remaining $1,000 whenever you need.
Because a personal line of credit is revolving credit, you can draw from it, repay it, and draw again as many times as you need up to your credit limit. This means if you borrow $500 from your $1,500 limit, and then repay your borrowed amount, you can spend up to $1,500 again. And again, and again — however many times you repeat this cycle.
Drawing from your personal line of credit is simple. With a Lendly personal line of credit with CC Flow, you initiate a cash advance for your desired amount. If you’ve connected your debit card, your funds will be deposited by CC Flow as quickly as one hour. And you’re free to use the cash however you need.
Many personal lines of credit are APR-based, meaning you pay an additional percentage of the amount you have borrowed in added interest. But unlike most credit cards and credit lines, the Lendly personal line of credit with CC Flow is fee-based. Instead of having to worry about interest every period, you’ll incur a set fee based on your balance. And, when you make a payment on your credit, it applies to both the principal — the total amount you have borrowed against your credit limit — and this fee amount.
Anywhere you get a line of credit, you'll have to make regular payments toward your borrowed balance in order to repay it. Depending on your lender, this may mean monthly or biweekly payments. With Lendly, however, you don’t have to stress about your repayment schedule — payments are built around your pay periods, making payments easier to manage. That means that if you’re paid biweekly, you can repay a portion of your balance with each paycheck instead of having to plan around a monthly bill.
A personal line of credit can be an ideal product to help you cover unexpected expenses, fund a project, or build a good credit history. Even so, anytime you’re thinking of borrowing funds, it’s important to consider all aspects and ensure that it’s the right next step for you and your finances.
Wondering if a personal line of credit is right for you? Keep these pros and cons in mind.
Pros of a personal line of credit:
Cons of a personal line of credit:
Both a personal line of credit and a personal loan can be a flexible credit option for many borrowers. Since they’re not tied to a specific product or purchase the way student loans, home loans, and auto loans are, personal loans and personal lines of credit can be used for just about any need. Eligibility requirements (income, credit score, credit history, employment history, etc.) are typically similar for both credit types. But there are some key differences to consider when determining which option is right for you.
When you’re approved for a personal loan, you receive the funds as a lump sum. This means if you’re approved for $1,500, the entire amount will be deposited into your bank account. You are free to use it as needed, but you will also pay interest on the entire amount — even if you haven’t spent those funds yet.
Conversely, with a personal line of credit, you only pay interest or fees on what you have actually used. If you only spend $200 from a personal line of credit with a $1,500 limit, you won’t pay interest or fees on the remaining $1,300.
Like most credit types, a personal line of credit can affect your credit score for better or for worse — depending on how you use it. Used wisely, it can help you establish credit or build a positive credit history. But misusing your line of credit can have a long-term negative impact on your credit.
Here are some ways a personal line of credit can factor into your credit score:
When you need extra funds, Lendly can help with flexible credit products and repayment options that fit your lifestyle. Click below to apply and get started.
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