To be good at money management you need to be financially literate. Though even after planning money usage, due to some reasons we suffer poor funds, and to end up this emergency we look for borrowing options like Traditional Loans, borrowing from friends or family, credit cards, and line of credit, etc. From the above list when we talk about credit cards and line of credit many believe these both options are the same, though Line of credit and credit cards are more likely similar to each other excepting the thing that, all credit cards can be a line of credit but not all line of credit can be a credit card. If you’re confused with the above statement don’t worry, after reading this article all your query related to the line of credit and credit cards will be resolved. When choosing any one of these two, you should know what are these and how do they work. You have to take your decisions wisely not only by depending on advertisements. Also, you have to be clear with the fact that, if you have a healthy credit score then and only then you will be allotted these facilities.

What is a Credit line (LOC)?

A credit Line Card is a card that allows salaried and self-employed individuals to avail an instant personal loan, very similar to credit cards. In LOC one can borrow money when needed and can repay within the time limit, and can again borrow it without applying for another or new loan. This gives you more flexibility than one-time personal loans.


What is a Credit card?

A credit card is a financial medium offered by banks and financial services with a predefined credit limit depending on individual credit score, credit history, and income. Once your credit card bill is generated you have to pay the bill amount within a certain time frame, beyond that you have to pay interest on your purchase.

What makes a line of credit differ from credit cards?

Foremost or we can say the initial difference between Line of credit and Credit cards is that line of credit comes with a rotation credit line, instead of a lump sum amount like loan offers, you have spent within that credit limit. Whereas via credit card you can make purchases and pay back.

credit card

Can Line of Credit and Credit cards cost your credit score?

The answer is yes they do, credit card and line of credit affects your credit score in different ways, for healthier or poor let’s see how,
When one applies for a credit line, the provider makes a stiff inquiry for your credit score and history. This appears on your credit report, whereas for a credit card, this inquiry can transitorily lower your credit score.

If you don’t have any loan history before or credit score, this LOC cab helps you build your credit score as this adds a revolving account to your credit history. More likely to LOC by having a credit card, also adds a revolving account to your history and help in achieving a good credit score.

The major things that hit your credit score are how you pay back your card bills and LOC payments. As timely payment help you raise your credit score vice versa untimely payments can cost you severely. Timely payments on LOC boost payment history and help in raising credit score, and delayed payment can fall your score also you have to pay a penalty for the same.

Though the line of credit or credit cards help you with funds but is not recommended to rely on them every time, you have to manage your funds wisely.