How to Maintain an Equity Line of Credit

Maintaining an equity line of credit provides you with flexible, long-term financing for personal or business needs. The first step is opening the line, and the second step is maintaining your loan through regular use and payments.

Getting an Equity Line of Credit

You can use any asset you own to create an equity line of credit. For a personal line, a home is the most common asset used. Businesses also obtain equity lines of credit based on their commercial assets. Your loan will be distributed in a sum dependent on the size of this asset. Most loans will be distributed as less than the value of the asset, though some loans can be over 100% of the value.

Maintaining an Equity Line of Credit

Once you have your line open, you can begin using your credit, spending up to the limit at any given point. You will be required to make minimum monthly payments. These payments are low; however, you should pay down your balance to avoid compounding interest charges. Even if you cannot pay down your balance, the most important thing is to never miss the monthly payment. Missing this payment will lead to a credit score decrease, extra charges, and the possible loss of your credit line.

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