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What exactly is a LOC?

Frequent Contributor

What exactly is a LOC?

I know it stands for Line Of Credit? But whats the benefit of it?

Starting Score: FAKO: TU 602 EQ 550 EX 565 - 08|2012
Current Score: MyFICO: TU 633 EQ 637 EX 669 (AMEX PULL)09|2012
Goal Score: 700 across the board In my wallet: NFCU cashRewards 12000CL, NFCU LOC 10K CL, BofA cashRewards 5000CL, BofA PP 3000CL, JAREDS (AU) 1500CL, SEARS (AU) 7000CL
Under my mattress: Orchard Bank 320CL and Saks Fifth Avenue 100CL. Finally in the Garden. App Free Since 9/18/12 - No apps until March 2013
Message 1 of 9
8 REPLIES
Valued Contributor

Re: What exactly is a LOC?

It's revolving credit you access by checks or transfers instead of a credit card.  So you can draw money, pay it down and draw it again.  If it's secured by your home it is a HELOC (Home Equity LOC).  Often the interest rate is lower than on a credit card.

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
Take the FICO Fitness Challenge
Message 2 of 9
Super Contributor

Re: What exactly is a LOC?

It is like a sum of money available to you just in case like a personal loan that you can borrow against. Generally also as a form of overdraft protection

 

You can make payment straight from the LOC using checks or bank transfers.




Message 3 of 9
Frequent Contributor

Re: What exactly is a LOC?


chasmith wrote:

It's revolving credit you access by checks or transfers instead of a credit card.  So you can draw money, pay it down and draw it again.  If it's secured by your home it is a HELOC (Home Equity LOC).  Often the interest rate is lower than on a credit card.


Thanks! How is it reflected on credit report?

 

Starting Score: FAKO: TU 602 EQ 550 EX 565 - 08|2012
Current Score: MyFICO: TU 633 EQ 637 EX 669 (AMEX PULL)09|2012
Goal Score: 700 across the board In my wallet: NFCU cashRewards 12000CL, NFCU LOC 10K CL, BofA cashRewards 5000CL, BofA PP 3000CL, JAREDS (AU) 1500CL, SEARS (AU) 7000CL
Under my mattress: Orchard Bank 320CL and Saks Fifth Avenue 100CL. Finally in the Garden. App Free Since 9/18/12 - No apps until March 2013
Message 4 of 9
Frequent Contributor

Re: What exactly is a LOC?


CS800 wrote:

It is like a sum of money available to you just in case like a personal loan that you can borrow against. Generally also as a form of overdraft protection

 

You can make payment straight from the LOC using checks or bank transfers.


Thanks! CS

 

Starting Score: FAKO: TU 602 EQ 550 EX 565 - 08|2012
Current Score: MyFICO: TU 633 EQ 637 EX 669 (AMEX PULL)09|2012
Goal Score: 700 across the board In my wallet: NFCU cashRewards 12000CL, NFCU LOC 10K CL, BofA cashRewards 5000CL, BofA PP 3000CL, JAREDS (AU) 1500CL, SEARS (AU) 7000CL
Under my mattress: Orchard Bank 320CL and Saks Fifth Avenue 100CL. Finally in the Garden. App Free Since 9/18/12 - No apps until March 2013
Message 5 of 9
Contributor

Re: What exactly is a LOC?

Credit cards are a line of credit, but usually it refers to any credit line thats not a credit card.

For example, I have a reserve line of credit with us bank. If I overdraw my account, they take it out of the line of credit, or a can transfer some out manually if I want.

Paypal also has given me a line of credit, which is exatly like a credit card, but no physical card.

 

Often (if its just an unsecured line) they have little to no benefits and often no interest free perioid.

My ultimate credit wish,
a JP Morgan Palladium card
Message 6 of 9
Super Contributor

Re: What exactly is a LOC?


AvaMommy wrote:

chasmith wrote:

It's revolving credit you access by checks or transfers instead of a credit card.  So you can draw money, pay it down and draw it again.  If it's secured by your home it is a HELOC (Home Equity LOC).  Often the interest rate is lower than on a credit card.


Thanks! How is it reflected on credit report?

 


My LOC reports as a 'Line of Credit' with a credit limit




Message 7 of 9
Valued Contributor

Re: What exactly is a LOC?

It's revolvig debt, reports "like" a credit card (balance, credit limit) and affects Utilization.

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
Take the FICO Fitness Challenge
Message 8 of 9
Frequent Contributor

Re: What exactly is a LOC?

Ok Gotcha!

Starting Score: FAKO: TU 602 EQ 550 EX 565 - 08|2012
Current Score: MyFICO: TU 633 EQ 637 EX 669 (AMEX PULL)09|2012
Goal Score: 700 across the board In my wallet: NFCU cashRewards 12000CL, NFCU LOC 10K CL, BofA cashRewards 5000CL, BofA PP 3000CL, JAREDS (AU) 1500CL, SEARS (AU) 7000CL
Under my mattress: Orchard Bank 320CL and Saks Fifth Avenue 100CL. Finally in the Garden. App Free Since 9/18/12 - No apps until March 2013
Message 9 of 9