How to Close a Line of Credit

A line of credit allows you to borrow money, up to a set limit, on an as-needed basis. Lines of credit differs from loans, which immediately provide you with the full amount of borrowed money up front. With a line of credit, you only pay interest on the outstanding balance. The most common lines of credit are home equity lines of credit, which are secured by your home; some banks also offer personal lines of credit.

Instructions

1

Review your line of credit agreement. Specific instructions for closing the line might be contained within the agreement. The agreement also contains information on fees or penalties related to closing the line, if applicable.

2

Pay off any outstanding balance. Most banks do not allow you close a line of credit that has a balance. The bank may close the line on its own initiative, however, if your agreement allows it.

3

Call the lender to obtain details on closing the line of credit and find out if it has forms you must use. The phone number should be printed on your account statement. Even if your credit agreement provides information on closing the line, it's a good idea to call to ensure nothing has changed.

4

Write a letter to the lender specifically stating that you wish to close the line of credit. Include the loan or account number in your letter. Lenders often require account closing requests in writing. If the lender has forms for closing a line, fill out those instead of writing a letter.

5

Mail the letter to the lender via certified mail, return receipt requested. This will allow you to track the letter until it is delivered to the lender, and to ensure the line is closed in a timely fashion. It also provides proof of delivery, should a question arise.