Core Insights - A line of credit is a flexible borrowing tool that allows access to funds up to a set limit, enabling users to draw as needed and pay interest only on the amount utilized [1][3] - This financial arrangement serves as a powerful tool for managing finances, covering emergencies, supporting cash flow, or funding major purchases without the need for a lump-sum loan [2][4] - Different types of lines of credit exist, each tailored for specific needs, including personal lines, home equity lines, business lines, secured and unsecured lines, and demand lines [5][6] Summary by Category Types of Lines of Credit - Personal lines of credit are unsecured and based on creditworthiness, suitable for various personal expenses [6] - Home equity lines of credit (HELOCs) are secured by home equity, typically offering lower interest rates for large expenses like renovations or education [6] - Business lines of credit provide flexible funding for business owners, with approval often dependent on revenue and credit profile [6] - Secured lines of credit are backed by collateral, usually offering lower interest rates and easier approval for those with modest credit scores [6] - Unsecured lines of credit are not backed by collateral, with approval heavily reliant on credit history and income, generally carrying higher interest rates [6] - Demand lines of credit, more common in business, can be called due by the lender at any time, necessitating careful cash flow management [6]