How to Obtain Unsecured Lines of Credit

An unsecured line of credit is a loan that does not require collateral. Banks and credit unions have different names for unsecured lines of credit, such as "unsecured signature line of credit" or "unsecured personal line of credit." The credit lines feature credit limits based on your income and credit worthiness. You are allowed to draw from your credit line until you reach the credit limit, according to the Bankrate website.

Instructions

1

Obtain your credit report and credit score. Order a copy of your credit report for free from Annual Credit Report (see Resources). The site is authorized by the Fair Credit Reporting Act to offer free reports under the terms of the Fair Credit Reporting Act. Follow the instructions included with the report to order your credit score separately, for a fee.

2

Compare your credit score to the general standard for "good" credit. Privacy Rights Clearinghouse, a nonprofit consumer information company, reports that credit scores range from 300 to 850, with scores below 620 considered to be poor. The site reports that applicants with credit scores below 620 are considered by lenders to be "high risk." According to the city of Phoenix, 75 percent of the people with credit scores in the United States have scores of 650 or higher. Delay applying for an unsecured loan until your credit improves if your score is below 620. The absence of collateral for an unsecured loan could make approval difficult if you are considered a high risk-borrower.

3

Resolve any delinquent debts on your credit report by making payments. Delinquent debts include active accounts that are showing on your credit report as past due, along with closed accounts that have not been paid. Make payments in full on all closed accounts, including those that have been assigned to debt collection agencies. Also dispute any errors on your credit report by entering complaints at the credit bureau's website (see Resources).

4

Compare interest rates and fees on unsecured lines of credit by visiting banks and credit unions, or get the information from their websites.

5

Apply for the unsecured line of credit by filling out an application in the bank, online or by speaking with a customer service representative. Provide all the requested information, including your name, Social Security number, physical address, annual income and total monthly debt.