Lines of credit are flexible borrowing options that allow individuals or businesses to access funds up to a predetermined credit limit as needed, rather than receiving a lump sum. Unlike traditional loans, lines of credit provide ongoing access to money, similar to a credit card. Borrowers can draw from the line of credit, repay it, and borrow again within the credit limit. Interest is only charged on the amount borrowed, not the entire credit limit. Lines of credit can be secured, requiring collateral like home equity, or unsecured, based on the borrower's creditworthiness. They are useful for managing cash flow, covering unexpected expenses, or financing ongoing projects. The flexibility and revolving nature make lines of credit a valuable financial tool for both individuals and businesses.
