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How to Apply for a Personal Line of Credit Online

 Published on November 21, 2022

How to Apply for a Personal Line of Credit Online
Have you ever gone through a period in life where money was tight, expenses were piling up, and you weren’t sure how you were going to make ends meet? Maybe you’re still dealing with a similar situation right now? Well, you wouldn’t be the first. One of the roughest parts of going through a period of financial insecurity is knowing that an emergency expense could be lurking around the corner, primed to make your life even harder. Whether your furnace shuts off unexpectedly or your car breaks down on the way home from work, unexpected expenses that need to be dealt with right away can spell trouble for your bank account if you don’t have the savings to pay for them. So, what do you do in these types of emergency situations? Like we said, if your savings are light and you don’t have an emergency fund ready to step in and be the hero, you may need an alternate solution. After all, emergency funds don’t just spring up overnight. They take time and sustained contributions to grow enough to make an impact in times of need. If you’re looking for a backup plan, a personal line of credit may be able to help. But what is a line of credit, and how do you go about applying for one? We’re going to walk you through some of the key steps in applying for a line of credit – specifically an online line of credit.

Why Apply for a Personal Line of Credit?

Before you start to look into how to get a line of credit, you should take a moment to assess your financial needs, ask yourself why you’re considering applying for one in the first place, and figure out if your needs are worth taking on debt for. Person applying for a line of credit online on their phone. Like we’ve already said, one of the uses of a personal line of credit is to serve as a short-term financial solution in emergency situations. However, it’s worth pointing out that being able to tap into a revolving form of credit at a moment’s notice may be a little too tempting in some cases. Do you have the willpower to stay away from your line of credit the next time you sit down to plan a vacation? Or maybe you see it as an easy way to pay for your upcoming recurring bills? The truth is, this can be a slippery slope. Your line of credit isn’t meant for discretionary spending, and using it irresponsibly can get you into a mountain of financial trouble. You should even be cautious when you plan on using it for emergency expenses, as you’ll want to make sure you have a clear understanding of how much interest and/or fees you’ll be paying, and whether or not your finances will be able to handle it down the road. With all this in mind, when does it make sense to consider applying for a personal line of credit? The answer to this question may be different from person to person, but some general situations that may constitute an emergency for most people can be things like:
  • Emergency car repairs
  • Home repairs that need to be dealt with right away
  • Healthcare expenses that you need to pay for out of pocket

What is an Online Line of Credit?

We’ve mentioned online lines of credit, but what are these exactly? Well, in terms of structure, they work similarly to most lines of credit. If you’re approved for one, you’ll have a credit limit that you can draw available funds from, and you’ll be able to draw money on a continuous basis as you pay down the balance. The key feature of an online line of credit is that instead of applying for one from a physical location, you’ll apply for one online and if you’re approved, you’ll have your funds deposited directly into your bank account. That being said, it’s important to remember that some lines of credit may not be offered exclusively online, and a lender that offers online lines of credit may still offer them at a physical location. For a lot of people, the benefits of a line of credit online revolve around their convenient nature. The application process is typically fast, and you can often start to apply for a personal line of credit on the go.

How to Apply for a Line of Credit Online in 5 Steps

So, if you feel like an online line of credit is a potential solution to whatever cash flow problems you’re having, you might think that it’s time to start working your way through some loan applications. But before you dive in, there are some things you can do to make sure you work your way through this process properly.

1. Look at your Credit Score

Your credit score may be one of the key pillars that lenders look at in order to assess your creditworthiness, so it’s a good idea to get a look at your credit score before you start the application process. This may help to give you some idea of the types of products and rates you might be able to qualify for. Person on their laptop researching lines of credit online. In order to get your credit score, you can:
  • access your credit score from Equifax or TransUnion.
  • go online and get this information through a company that provides your credit score for free.
  • go through your credit card or bank statements as some places may share this information with customers.

2. Research your Options Online

One of the benefits of a line of credit online is that the process of comparing potential options is fairly quick and simple. This is an important step that you’re not going to want to skip. Now that you have an idea of where your credit score stands, you can start to browse through online lines of credit that are offered in your province or territory to see what suits your needs and financial situation.

3. Calculate What you can Afford

We’ve already mentioned, but it bears repeating – don’t ever apply for credit when you can’t afford to repay it. So, in order to avoid this, one of the things you can do is calculate how much the loan you’re applying for may cost. There may be some personal loan calculators online that may be able to help you. It’ll ask you to enter some information about the loan, and then it’ll give you a ballpark estimate of what the loan is going to cost you. The next step is to take this information, plug it into your budget, and see if the numbers make sense. This should give you an idea of what you can afford, and what you can’t.

4. Organize your Personal Information

If you’re facing an emergency expense that needs to be taken care of right away, you’ll want to do what you can to make the application process as smooth as possible. One thing you can do is to get your personal information organized ahead of time. While not every lender is going to ask for the exact same info, certain details may be required on most personal line of credit applications, like:
  • Contact information
  • Bank account information
  • Proof of employment and income information

5. Determine If an Offer is Right for you

At this stage, you may have applied for a line of credit and received an offer back. Take your time to review the offer carefully, don’t rush into the decision, and pick it only if it suits you. You should also be sure to look further into the lender that is offering the loan, if you haven’t already and read into what other people have had to say about their experiences with them. Person looking at their line of credit contract.

Considering a Line of Credit?

An online line of credit can be a useful means to get the money you need in an emergency situation. Having said that, you should never feel like you have the green light to rush into an impactful financial decision. Take the time to assess your situation and follow the proper course of action. The steps we’ve listed should not only give you some direction in terms of how to apply for a line of credit, but should also help you to make sure you approach this process with caution.

Disclaimer: This page provides general information only and does not constitute financial, legal or other professional advice. For full details, see Fora’s Terms of Use.