What is a credit line?
A credit line, or line of credit, is the amount of credit extended to a borrower. The amount of credit extended is most often based on the borrower’s credit rating. A credit rating, or credit score, is an assessment of a borrower’s credit history coupled with their assets and/or liabilities. Perhaps the most common credit line is the maximum amount a person has on their credit card. The maximum amount that a person may spend on their credit card is the credit line for that credit card. Another common type of credit line is the home equity line of credit (HELOC). Home equity is the difference between the amount owed on a home and the amount that the home is worth. A credit line is extended to a homeowner based on the amount of equity that they have in their home. Setting up a line of credit requires several upfront costs that must be taken into consideration. These upfront costs include appraisal fees, any predetermined application fee, and/or closing costs. In addition, a HELOC typical
