How to Get Approved for a Line of Credit

When it comes to your financial health, credit is often the most crucial element. Building and maintaining a solid credit score is not difficult in theory, but in practice you must keep tight control over your spending habits and personal budget. A line of credit--whether unsecured or secured--must similarly be managed well. Revolving loans (such as lines of credit) are notoriously difficult to repay if you live above your means. Make sure to do ample research prior to accepting a line of credit.

Instructions

1

Pull a copy of your credit report from Annual Credit Report (see Resource section). Also, pay for a copy of your FICO score. This number will give you a snapshot of your creditworthiness. Scores over 720 are excellent, but scores below 600 are poor. Do not apply for new credit if your score is well below 600. Instead, work on cleaning up bad debts.

2

Research your loan options. If you are a homeowner, the most competitive line of credit is the HELOC, or home equity line of credit. However, this loan is secured with the equity in your home. The most popular line of credit is the credit card, though unless you have spectacular credit, it can be financially burdensome.

3

Research lenders. Small local banks and credit unions often offer low-interest, unsecured, low-limit lines of credit for current customers. You can also research finance companies, such as Wells Fargo Financial and CitiFinancial. These companies cater to customers with less-than-perfect credit.

4

Apply to several lenders, but not too many (excessive applications will generate too many credit reports and possibly negatively affect your credit score). Make sure to apply for an actual amount, not just a credit line. Do not overextend yourself--only apply for an amount that is financially manageable.

5

Compare all offers with a trusted advisor, such as a family attorney or accountant. Pay close attention to the interest rate. In the wake of the 2008 credit crisis, lenders have tightened their guidelines and fixed interest rates are tough to find--especially on credit cards.

6

Choose a lender based on the limit, the interest rate and the fees involved. Make sure the lender tells you the monthly payment amount if you were to take the full advance on the credit line--this is the most the monthly payment can be.