Credit Line

If we look at a credit line meaning, it is the amount of money borrowed by a person in which a bank or financial institution sets a limit that a person can use over and over again. This makes a credit limit revolving, which makes it one of the most flexible borrowing tools. Unlike loans, credit lines can be used for many purposes like everyday purchases, small renovations, managing trips and paying high interests debts. A person’s credit line works similarly to his credit card, and the person can use the funds whenever he needs them as long as the credit is available. But credit lines have higher interest rates as compared to a loan. The payment method is monthly and made up of both interest and principal. The credit line of a person has an impact on his credit reports and credit scores as well.

Difference 101