*You walk in the door after a long day of work, wondering whether you'll reheat that lasagna in the freezer or just order a pizza (both are Italian, right? Italians are healthy). You go with the lasagna - because you promised you'd put your whole restaurant budget into savings this month - and realize it's a moot point. There's at least an inch of standing water in the kitchen. You look up and see some piping sticking through the ceiling in the shape of a V. Except there's a gap at the point and water is gushing out. "That doesn't look right," you think. Once the initial shock wears off, all you can see are dollar signs. "How am I going to cover a fix like this?"*
Does this sound like you? Or perhaps your situation is more optimistic - maybe you're planning a wedding or expanding your business. Whatever your circumstances, if you're not quite sure how much it's going to cost to accomplish your goal and you need a flexible loan that can grow with you, a [Line of Credit](https://www.aviocredit.com/line-of-credit/) may the best solution. But exactly how does a Line of Credit work? Glad you asked!
A Line of Credit is basically [like a credit card](https://www.nerdwallet.com/article/loans/personal-loans/personal-line-credit).<a href="#one"><sup></sup></a> You're approved for a certain loan amount - your credit limit - and you can continue to withdraw funds whenever you need up to that limit. Even better, you only pay interest on the amount that you withdraw. So, if you're approved for $8,000 but your project only ends up costing $3,000, you would pay interest on that $3,000. There are many Line of Credit types to fit your specific needs:
* **Home Equity Line of Credit (HELOC)** - known as a secured loan because your home is used as collateral. Lenders [use a formula](https://www.nerdwallet.com/article/mortgages/heloc-home-equity-line-of-credit) that is based partially on the value of your home and how much you still owe on your current mortgage to calculate your approval amount.<a href="#two"><sup></sup></a> *Note: Avío Credit does not offer this product.*
* **Business Line of Credit** - this loan is often unsecured but can also be secured if the business uses inventory or property as collateral. To qualify, a business must have been functional for at least six months and [produce $25,000 in annual revenue](https://www.debt.org/credit/lines/#Secured_vs_Unsecured_Credit_Lines).<a href="#three"><sup></sup></a> *Note: Avío Credit does not offer this product.*
* **Personal Line of Credit** - an option for most people because it's unsecured, meaning no collateral is tied up in this loan.
While these loans look a little different up front, they function in much the same way. Once you are approved for your credit limit, you enter into what's known as the **draw period**. During this time, you are able to [withdraw and repay money](https://www.experian.com/blogs/ask-experian/what-is-a-line-of-credit/) against your credit line as often as you need.<a href="#four"><sup></sup></a> After a set amount of time, usually spelled out in your loan agreement, you move into the **repayment period** where you can no longer withdraw funds and must begin repaying your balance. Typically, this is done in a series of monthly payments.
*At Avío Credit, we specialize in providing customers a **personal Line of Credit** so we can help the most people reach their financial goals. [Apply today](https://secure.aviocredit.com/LoanApplication/Account) to see your options.*
## What do I need to apply for a Line of Credit?
Once you're ready to apply for a Line of Credit, you'll need to make sure you have the following items:
* Valid ID such as a driver's license or passport
* Proof of income
* Open bank account
If you're using an online application, you may also need a functional [email address and your Social Security number](https://www.aviocredit.com/line-of-credit/how-it-works/).
Because a personal Line of Credit is an unsecured loan, meaning there's no collateral to borrow against, lenders are typically looking for a [good or great credit score](https://money.usnews.com/credit-cards/articles/what-is-a-line-of-credit) to vouch for your financial reliability.<a href="#five"><sup></sup></a> A prime or near prime credit score could also secure you better rates on your loan.
*If your credit score is less-than-ideal, no fear! [Avío Credit](https://secure.aviocredit.com/LoanApplication/Account) may still have options for you.*
## How to be smart about a Line of Credit
Because of its typically larger approval amount and flexible draw period, a Line of Credit is sometimes considered a higher-risk loan. If you take out more funds than you need, miss monthly payments, or can't repay your remaining balance, the interest alone can become overwhelming for any budget. Here are some pro-tips to help keep your loan - and your finances - in check:
* Ensure ahead of time that you will have the resources to make payments toward your loan
* Only draw the amount you need for your specific goal or project
* Make payments toward your balance during the draw period to save on interest
* Set up automatic recurring payments so you never miss a due date
If you're feeling stuck or really struggling to make payments, give us a call! At Avío Credit, our loan specialists are here to help you find payment solutions to fit your needs, both [in English](tel:18886382846) and [en Español](tel:18883412846).
## Know your options
You may still be wondering if a Line of Credit is right for you. Maybe you need [one lump sum](https://www.aviocredit.com/installment-loans/) instead of an open credit line. Or you're looking for solutions that are specifically [accessible online](https://www.aviocredit.com/online-loans/). At Avío Credit, we believe in offering a variety of options to help you meet your financial goals. If you still have questions or need additional information, [drop us a line](https://www.aviocredit.com/contact-us/). We are here for you!
<div id="one"><sup></sup> Millerbernd, Annie (2022, January 7). *What Is a Line of Credit?* Retrieved from: [https://www.nerdwallet.com/article/loans/personal-loans/personal-line-credit](https://www.nerdwallet.com/article/loans/personal-loans/personal-line-credit)
<div id="two"><sup></sup> Lewis, Holden and Wood, Kate (2022, January 3). *What Is a Home Equity Line of Credit, or HELOC?* Retrieved from: [https://www.nerdwallet.com/article/mortgages/heloc-home-equity-line-of-credit](https://www.nerdwallet.com/article/mortgages/heloc-home-equity-line-of-credit)
<div id="three"><sup></sup> Fay, Bill (2022, May 9). *What Are Lines of Credit and How Do They Work?* Retrieved from: [https://www.debt.org/credit/lines/#Secured_vs_Unsecured_Credit_Lines](https://www.debt.org/credit/lines/#Secured_vs_Unsecured_Credit_Lines)
<div id="four"><sup></sup> Akin, Jim (2021, September 9). *What Is a Line of Credit?* Retrieved from Experian: [https://www.experian.com/blogs/ask-experian/what-is-a-line-of-credit/](https://www.experian.com/blogs/ask-experian/what-is-a-line-of-credit/)
<div id="five"><sup></sup> Harzog, Beverly (2021, August 11). *What Is a Line of Credit?* Retrieved from: [https://money.usnews.com/credit-cards/articles/what-is-a-line-of-credit](https://money.usnews.com/credit-cards/articles/what-is-a-line-of-credit)