Define: Line Of Credit

UK Accounting Glossary

Definition: Line Of Credit


Quick Summary of Line Of Credit


Financing offered to businesses by banks or other financial providers to help the business with short-term financial needs. This term is often used in the real estate business, as well.



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Full Definition of Line Of Credit


A line of credit, also called a credit line, is an arrangement between a bank or vendor and its customer that extends a certain amount of unsecured credit to that customer. A line of credit represents the maximum amount that the customer is allowed to borrow and owe. It acts as a loan, but, unlike a loan, a line of credit usually doesn’t require you to pay interest on the credit you don’t use. A line of credit is usually more fitting as a short-term loan than a long-term solution. Credit programs use a line of credit as a factor in their approval process; for this reason, borrowers might want to treat their line of credit as more than a mere guideline. Used wisely, a line of credit can help one’s financial growth, personally or professionally.


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Examples of Line Of Credit in a sentence


That company only survived the economic downturn because they had a generous line of credit at the bank that they used for the months their expenses exceeded their receipts.
Many homeowners take out a line of credit on their house, and use the money to make improvements that raise the overall value of the property.



Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/line-of-credit/
Modern Language Association (MLA):
Line Of Credit. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. March 28, 2020 https://payrollheaven.com/define/line-of-credit/.
Chicago Manual of Style (CMS):
Line Of Credit. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/line-of-credit/ (accessed: March 28, 2020).
American Psychological Association (APA):
Line Of Credit. PayrollHeaven.com. Retrieved March 28, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/line-of-credit/

Definition Sources


Definitions for Line Of Credit are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 10th February 2020.