iQuanti: As 2022 presents a fresh start to a new year, many are looking for new ways to get control of their finances. A line of credit could be the tool you need, offering the ability to borrow money on demand - whether you have a home renovation project or want some extra funds to cover basic expenses.
Luckily, getting a line of credit is a fairly simple process. Here's how lines of credit work and the steps you can take to get one.
What are lines of credit?
A line of credit is a form of revolving credit, meaning the borrower can draw on the line, up to their available limit. They'll only pay interest on the amount they borrow and can pay back through scheduled payments or all at once.
How to get a line of credit in four steps
Follow these four steps to get a line of credit for 2022:
1. Compare lenders
First and foremost, you should shop around and compare lenders. This will help you find great rates and terms but will also make sure you find a lender that's easy to work with.
One great tactic you can use to compare lenders is to get prequalified. This involves undergoing a soft credit check — which won't hurt your credit score — so the lender can show you terms you'll likely qualify for.
Sometimes, lenders mail prequalification offers to borrowers. The borrower can use a special code printed on the mailer to redeem their prequalified offer when applying. Otherwise, many lenders have prequalification tools online that use basic information like your name and address. With prequalifications in hand, you can compare your options with ease.
2. Gather all necessary documents
Lenders want to see proof that you can manage a line of credit successfully and make payments on time. So, once you finish shopping around, you'll want to gather all necessary documents, including:
- ID verification: Driver's license, state-issued ID, Social Security card, passport, or birth certificate. Some lenders may want to see two forms of ID.
- Proof of income: Pay stubs, W2s, tax returns, or bank statements.
- Proof of address: A mortgage document, lease agreement or utility bill.
3. Fill out and submit your application
With all documentation in hand, head to the lender's website and begin a new application. If you got a prequalified offer in the mail, the code provided should take you there. Fill out all required information and double-check to make sure everything is correct. Then, submit your application and wait for approval.
4. Receive your funds
If approved, you may receive the funds you need as quickly as the same day you apply or within 24 hours. Then, you can start borrowing money as needed up to your credit limit and repay the loan at your leisure.
Get a line of credit for next year
Lines of credit can be excellent tools for various purposes, from funding home renovations to covering everyday spending. And the application process for this type of loan isn't complicated. As long as you prepare adequately by shopping around, getting prequalified, and gathering all the documents you need, getting a credit line for 2022 can be a breeze.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
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Original Source: How to Get a Line of Credit in 2022
