5 Things You Can Do Before Applying for an Online Line of Credit

When an unexpected expense comes your way, you don’t always have the cash ready to cover it. An online line of credit can sub in for savings in a pinch, giving you the means to cover the unexpected without delay.

But before you get handed your line of credit, there are a lot of steps standing between you and your money. You have to hunt down an affordable option that you qualify for, which may not be as simple as it seems.

Here’s how you can streamline your experience in five easy steps. Do these things before applying to smooth out your process.

1. Go Local and Search by State

When searching the web for lines of credit, it’s easy to be overwhelmed by your options. Typing something as generic as “line of credit” will bring up millions of results. There’s no way you can get through all of them — some aren’t even legally available in your country, let alone state.

To find the financial institutions that are licensed to lend in your state, you’ll have to refine your search by where you live. For example, if you call Michigan home, you might try typing this into the search bar: personal line of credit Michigan.

Other options include “online personal line of credit MI” and “personal line of credits Michigan” — basically any combo that will tell your search engine to prioritize location. This way, you’ll filter out companies that don’t service your area and narrow in on a line of credit in Michigan instead.

2. Understand Your Financial Profile

Most financial institutions have qualifying standards that you must hit before you can even be considered for a line of credit.

Understanding how you shape up can help narrow your search even further, focusing on financial institutions that cater to people like you.

Here are some things you should keep in mind when shopping around:

  • Credit score: Some financial institutions have a minimum score, and they’ll deny anyone who falls below it.
  • Income: You may have to show proof you have a consistent paycheck, sharing such things as your income, pay schedule, and employment history.
  • Existing Debt: Some financial institutions review your debt-to-income ratio to see how much of your paycheck goes to current loans and lines of credit.

3. Compare Your Options

By now, you should have a shortlist of options available in your state that offer qualifying requirements you can meet.

From here, you’ll have to compare what they offer to borrowers, looking at rates, fees, and any other charges that apply to their loans. Read up on how they apply these costs to a line of credit, so you understand what you’re getting into if you were to use one.

4. Refresh Your Budget

Once you know the cost of using a line of credit, you can see how much your unexpected expense will cost in the long run. Sit down with your budget to see how this affects your cash flow. Remember, paying off your line of credit as fast as possible may help reduce what you pay in fees and free up your limit faster for the next emergency.

5. Get Your Finances Together

Finally, you’ll have a financial institution or two that satisfies all your needs. Now, it’s time to fill out your application. You’ll want to collect your Social Security Number, pay stubs, and banking info. Having these at hand will make filling out your application a breeze.

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