The Dos and Don’ts of Using a Line of Credit


A line of credit can be a very helpful thing to have if you have a home and you want to make improvements. It’s not always possible to afford what you want to do to improve your home without a little funding from the bank. If you have equity in your home, you can get a line of credit that will enable you to borrow against the house and have the funds with which to do what you please. This can be a very helpful thing for many homeowners if they have the credit to be able to do this. However, there are some things that people just don’t know about these lines of credit, and what you don’t know could hurt you far more than what you do know. So we have compiled a comprehensive list of do’s and don’ts to help you learn how to appropriately use your line of credit to the best of your abilities. Here’s our professional financial advice.

Do Use it For:


If you have an emergency and need funds to pay for something that you did not see coming, try using your line of credit to help finance that. This is considered a good idea for those who need to pay for something that might otherwise put them in a bind financially. Go ahead and feel free when this happens.


If there is an investment opportunity that you cannot pass up, you should consider this an okay deal. It’s not something you should consider lightly, however, but rather something you should seriously consider so that you don’t have to worry about your finances in the future.


When you are drowning in debt because of poor financial decisions you made in the past, you should consider the fact that you do not need to do this anymore. If you can pay off high-interest debts that are killing you because of the expense of the interest rates, do it. This can improve your financial future and make it more possible for you to live debt free and pay off your line of credit much faster.

Real Estate

Real estate is almost always a good investment. We do encourage you, however, to really think about what it is in which you want to invest. If you are looking for a way to invest in a rental property or something that will bring in income in the future, do it. If not, then you might reconsider. However, a line of credit is a nice way to invest in some real estate for your future.

Home Improvement

The best way to use your line of credit is to improve your home. You can make it worth more, easier to sell and more valuable if you make necessary improvements. If you’re not sure where to start, let us help you decide. Kitchens and bathrooms are the most important rooms in any home, and you should consider the fact that these rooms are going to help you improve the overall appeal of your home should you ever decide to sell.

Do Not Use it For:

New Cars

Cars are not an investment and they do nothing but cost you money. You will never sell a random car for more than you paid for it, and you will always lose money. Do not use your line of credit to further put you into debt, as this is only going to put you in a financial situation from which you might not be able to return if you are not careful.


This is not something you should pay for with money you don’t actually have. If you cannot afford a vacation otherwise, don’t take one. Vacations are not meant to be paid for with money that you took out as a loan against your home. It is not a wise idea to do this, and it will only put you further into debt. You will get nothing from it that will improve your future, so don’t use this money for this purpose.

Shopping Sprees

Extravagances you might not be able to afford are a bad idea when it comes to your line of credit. You may want those expensive shoes, those electronics, those new pieces of furniture or whatever, but you can’t afford them so you should not buy them. Do not make silly purchases with your line of credit; they will not help you to make your financial future more secure. They will only put you further in debt and leave you paying off shoes and televisions for years to come even though you should not be paying for those for years to come.

College Expenses

This is one you have to decide on for yourself. If you just have a few classes to finish your education and you can’t afford them, but know that a degree will change your financial future for the better, this might be something you should do. However, if you’re looking to fund your entire college education using your line of credit, you might want to reconsider. It’s not worth the price of your home to pay for your education this day and age. There are scholarships, grants and student loans that are better suited to this.


I cannot tell you how many times I’ve heard brides say that their parents have taken out a second mortgage to pay for their wedding. It makes me sad and it makes no sense. There is no reason to use your house to pay for a day; one day. If you cannot afford to have the wedding of your dreams just by paying for it, scale down a bit. You should not have to take out equity credit on your home to afford a dress or venue. It’s one day; your home is forever. Please do not use your home to fund a party, your living expenses or something else to this effect. It’s silly and it’s a waste of money; and what happens if your parents do this and end up paying for a marriage that doesn’t last? That’s awful.

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