Question by hughwj_06: What is “line of credit”?
I just applied for a line of credit loan through my local credit union branch and I wanted to know what’s the purpose of it and what does it do? I did it to help build my credit.
Best answer:
Answer by Judy
Keep it open for at least a year.
You don’t necessarily have to use it.
It’s there if you need it.
Pretty good idea to establish credit.
You have some good people at that credit union.
In about 45 days check your credit reports for free at
annual credit report.com
You’ll see it on there.
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About
A line of credit is used when you need a short-term loan. It’s prearranged, like you have done. There are no charges when you have no money outstanding. You are charged interest on the amount of money that is outstanding. Small businesses arrange for this as a safety feature.
If you are just a person rather than a small business, get a credit card to build up your credit history. If you pay your bills on time, you won’t owe any interest.