What is a personal line of credit?
UNDERSTANDING personal finance is one of the most important things when it comes to managing money. As you get older, understanding where your money goes and how it affects your credit score helps when you get close to retirement. A person line of credit is also known as an open-ended loan. This means that borrowers are able to withdraw funds as needed for a set period of time. The money is accessed through bank transfers or line-of-credit checks and limits can be anywhere from $1,000 to $100,000. Once the funds are withdrawn, interest rates start to occur and begin to charge on the outstanding balance until the entire loan is paid back. Like all things, there are pros and cons to using a personal line of credit. According to First Republic bank, some of the pros include:  Flexible access to funds  Pay interest on only what you use  Reusable cash flow  Ability to strategically combine and pay off high-interest debt  Some of the cons include:  Potentially high interest rates  Additional fees  May be difficult to obtain based on your credit score  Personal lines of credit are used for various things including, paying off student loans from multiple lenders, or covering expenses for home repairs or upgrades. While all banks might not approve someone for a personal line of credit, most banks offer it. One of the few banks that do not offer a personal line of credit is Wells Fargo. On July 8, 2021, Wells Fargo announced that they were no longer offering personal lines of credit. Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts, the bank said in the six-page statement. The decision is meant to help focus on credit cards and personal loans. When you apply for a personal line of credit, the lender will typically review your credit score. A credit inquire can affect your credit score as they influence 10% of your FICO score. While 10% is not that much, if you apply for new credit often it can hurt your score with the amount of times lenders run it. If you don't apply that often for new lines of credit then opening a personal line of credit won't have a major impact.