I'm considering opening a line of credit. The main purpose of this LOC would be to cover myself if I overdraw my checking account (I do this occasionally, and pay pretty steep fees every time). With a LOC, I would only pay interest on the overdrawn amount.

I know that this will impact my credit score as a new credit account. Are there any other things I should think of before opening up this LOC?

  • 3
    Wouldn't it be better to consider why you are repeatedly overdrawing your checking account, and find a solution for that? – a CVn May 20 '13 at 9:32

It will either appear as a new revolving account or not appear at all until you use it. The main impact will likely be the initial hard-pull when you apply, and it will wear off in several months.

|improve this answer|||||
  • Hard pull impacts report for 12 months. (Per Credit Karma) – JTP - Apologise to Monica May 20 '13 at 2:37
  • Would there be a fee to set up a LOC, plus it would be treated more as a business account and would charge for almost everything like getting a statement, etc – Dheer May 20 '13 at 3:09
  • @Dheer are you asking me? How would I know? In my bank its just a "credit limit" on the checking account, there's no additional statements. I have no idea what exactly it is that the OP is talking about. – littleadv May 20 '13 at 4:52
  • 1
    @littleadv Just thinking loud, as the OP is in US, typically whethere opening and maintaining a Line of Credit would cost. For example in India, to open a Line of Credit there is a initial cost and yearly costs. If so this should also be a consideration cost / benefit apart from the credit score. – Dheer May 20 '13 at 5:40

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.