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Do You Really Need a Line of Credit?


Many Canadian citizens have no balance on their line of credit or (LOC) account. They have no single debt as well. You may ask why they still have a line of credit.  If they are holding their HELOC or home equity line of credit, then it is linked to the title of their own homes.


For the business owner, he may have an obvious demand for business LoC. Most businesses are in need of an ease of access to their funds for many different reasons.


On the part of the homeowner, he or she may believe that personal LOC gives them easy access to their funds. Although this may seem true- but what are these funds for? These funds are intended to be used for buying groceries, vacation, repairs, entertainment, appliances, education and the like. These are among the common reasons being presented by the lenders. Will it be normal for the person to use a line of credit for clothing and groceries? Of course, this is not a normal reason. Using credit to meet the basic necessities is just a sign of financial stress.


The reality speaks of line of credit that offers a mental satisfaction. This is because it is easy to get big amount on easy funds. All of these requirements on emergency funds must first be satisfied through the use of credit card.


The credit line on home equity is a cross sellable credit product that enhances the real asset positions of the lenders. This also gives them a sense of security. Before you apply for this credit line, then you need to ask yourself if you need this.


Always remember that more debts would mean more trouble in the next coming years. It is best not to mortgage the future. You need to balance your expenses and earnings for a balanced life!

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