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Myths About Personal Line of Credit

When you are in dire need of funds and want to borrow money, then a personal line of credit can be your solution. Your lender charges interest only on the amount you borrow and are required to pay the borrowed amount and the interest in regular instalments.

With a personal line of credit, you can solve any of your financial worries and need not pledge your assets as collateral. So, if you are planning to apply for a line of credit, but want to clear off the most common myths about it, then you are at the right place!

Myth 1: Only banks provide a personal line of credit.

A very popular misconception about a personal line of credit is that it can be only availed from banks. While it is true that banks do extend credit lines, it does not necessarily mean that they are the only source for a line of credit. Many other financial institutions like non-banking finance companies (NBFCs), credit unions, and other online lenders also provide personal lines of credit products. As a borrower, it is also very essential for you to know that online lenders often have broader eligibility criteria when compared to banks.

Myth 2: A personal line of credit is a bad option.

There are many ways through which you can access credit whenever you are in dire need of it. Either by borrowing money from friends and relatives or by borrowing credit from financial institutions. Often, many people believe that by taking credit you end up falling into debt traps or indulging in overspending, and hence, this establishes a fact that why many people are afraid to take credit.

Remember that, any type of credit, when used wisely, can help you save money and make you financially stable in the long run. If you are taking credit through a credit line and repaying it on time, then it gets reflected in your credit history, which in turn gives you a better credit score, and in turn, helps you get a reasonable interest rate on larger loans.

So, if you are responsible with your finances, you can gain a lot more than lose when you avail of a personal line of credit. With a personal line of credit, you can resolve your debt consolidation, pay off medical costs, refinance your existing debt, get your home renovated etc.

Myth 3: You should not accept a hiked credit limit.

A credit utilisation ratio is a ratio that depicts how much credit you have used to the total amount of credit you have. Ideally, a credit utilisation ratio should be less than 30% which demonstrates a healthy financial situation. But on the other hand, if you are having a high credit utilisation ratio, then it depicts you as a high-risk borrower and can negatively impact your credit score.

If you are in a situation, where your expenses are greater in comparison to your credit limit, then you can ask for a credit limit increase. This way the ratio of your credit usage to total credit remains the same or even below 30%, and also helps you boost your credit score while meeting your expenses.

Myth 4: Processing and approval time for a line of credit is usually longer than other traditional loans.

It is one of the long-standing myths that the time taken to process and approve a line of credit is usually longer than other traditional loans. Considering the present circumstances, there are many instant loan apps like the FlexSalary loan app, that instantly process and approve a line of credit under minimal documentation and easy eligibility. With a FlexSalary loan app, by your side, you can also disburse the credit into your account immediately. This itself confirms that a personal line of credit is ideal, especially during emergencies.

FlexSalary is a loan offering product of a non-banking finance company (NBFC) called Vivifi India Finance Private Limited, which offers a personal line of credit under easy eligibility. Apart from it, you can also avail additional benefits, such as:

  • No fixed EMIs. Only easy repayments.
  • Unsecured and open-ended credit.
  • Interest is charged only on the loan amount that is used and not on the total amount that is approved.

Then why wait? Apply now and get a personal line of credit up to 2,00,000 online with FlexSalary.


1. How many lines of credit should I have?

Credit bureaus suggest that you can have around 5 or more accounts, which can be a mix of cards and loans. Because having very few accounts can make it hard for you to maintain a better credit score.

2. Is it better to close a credit or keep it open with a zero balance?

The standard advice is to keep unused accounts with zero balance open. The reason is if you close the account, this can reduce your available credit, which in turn makes your balance-to-limit ratio suddenly increase.

3. What is the highest credit score?

The best-known range of CIBIL scores is between 350-750, and anything equal to or above 750 is generally considered an excellent credit score.

4. Is it smart to pay off my credit card debt with a line of credit?

Using a line of credit to pay off your credit card debt can reduce your total interest costs and also reduce the amount of time that you are in debt.

5. Can you pay bills using a line of credit?

Paying your bills using a line of credit is a better solution because you will be charged interest only on the amount that is withdrawn and not on the total amount that is approved.