In this episode, we go over how to get a personal line of credit. A personal line of credit can be a powerful debt weapon in a Dynamic Banking strategy or velocity banking plan.
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Thanks for watching!
Hey folks. My goal is to help you eliminate debt fast!
One of the best ways we can do that is by using the Dynamic Banking strategy that I’ve gone over in a number of videos.
For a good break down of how that works, check out this video. It’s called Beat the Bank with Dynamic Banking and it talks about our debt elimination banking tools or debt weapons that we use to attack that debt as quickly as possible.
Now, with Dynamic Banking, also known as Velocity Banking, it’s just a simple offset accounting technique that maximizes the use of your cashflow to minimize interest charges. And it’s through the minimizing of those interest charges that you can take whatever you’re spending now, whatever income you have now and start going after that debt that seems so impossible to do.
Now, specifically in today’s video I want to talk about personal lines of credit.
One of our favorite debt weapons, or debt elimination banking tools, is the home equity line of credit. But it’s not the only way to utilize Dynamic Banking to offset interest charges.
So, today I want to talk about a personal line of credit. How you can get a personal line of credit and how you use that personal line of credit. Before we get into this, be sure to hit the subscribe button below so that you can stay up to date on new videos as they come out, and hopefully we’ll be able to keep expanding your financial education and help you, not just eliminate your debt, but then go on to grow your wealth and become financially free.
Welcome to Oregon Cash Flow Pro, where we’re here to help you take control of your finances, maximize your cash flow, and reach financial freedom.
Let’s get into it!
When it comes to personal lines of credit, you can get these at almost any banking institution or credit union.
So, we have secured lines of credit and unsecured lines of credit. The secured lines of credit can either be secured by capital or money (cash). A personal line of credit is the same way. There’s nothing underlying it. You don’t have a home backing it up, but the bank may require you to have cash in one of their accounts. You might need to have money in a savings account to secure whatever the personal line of credit is.
Now, our goal is always to use unsecured lines of credit because it’s just less risky for you. It puts more risk on the bank. As such, you end up paying a higher interest rate for that unsecured line of credit as well. But the way that we utilize these lines of credit to attack debt, the interest rate doesn’t matter a whole lot. As long as it’s fairly low, and by low we mean under 10%. There is a lot of debt that we can attack, even fairly low interest credit debt, that we can attack with a debt weapon that has an interest rate of 10% or lower.
Now, we can certainly do it with higher interest rates as well. A lot of it will just depend on the situation and how the numbers figure.
So, this is a reminder, if you have a situation where you want to figure out how Dynamic Banking will work for you, I’m happy to help you out with that. In the show description below, you can find a link where you can fill out a form and tell me about your situation and I will be glad to do a break down for you on how Dynamic Banking can work. Where your savings are at, how often you need to chunk, all of those things that have to do with making this system work for you.
So, I’m happy to do that, but you gotta fill out the form!
Personal lines of credit may range anywhere from 4%, if you just have stellar credit and you’ve been with the bank for a long, long time. I’ve heard of people with a 4% interest rate and they can go up to 15% or 17%, maybe even higher, but a lot of the good banks will cap that out. If you have just barely qualifying credit, you’ll still get a lower rate than you would from a credit card.
Typically with a personal line of credit, you’re going to want to have a 680 or higher credit score. If you haven’t gotten there yet, check out this other video that I’ve done on how to maximize your credit score. Everything we do here, when it comes to eliminating debt, revolves around having a good credit score so you can qualify for better rates, so you can qualify for special introductory rates.
There’s so many good reasons to have a good credit score and that video will help you get there. And if you’re already there, it will help you maximize that credit score! There’s a lot of good information in that video, you should definitely check that one out.
So 680 or above credit score is what we’re looking for, for personal lines of credit. Really you should start off, check with a credit union near you. Those are usually the best places to go start building a relationship. And you really do want to have a relationship with the banks that you use or the credit union you use. Because you can go in there and you can talk to them about specific situations.
It may feel, especially if you’re talking to a large corporate bank, it may feel like they don’t have any type of flexibility, but they actually do. So, get in there, start building those relationships, because you’re going to get some flexibility if your situation isn’t ideal for their books.
Now, your personal line of credit, it’s going to be easiest to use it for debt elimination if it’s at the same bank that you actually have your checking and your savings account, and where you get your paycheck deposited. I know this from personal experience. I have my home equity line of credit with that bank and the process is really easy for us to transfer back and forth from our line of credit. And really when it comes to getting rid of the debt, we want this to be as easy and painless as possible!
So, try and reach out to the bank that knows you already, because you have accounts with them and see if they’ll extend to you a personal line of credit.
One thing to keep in mind is anytime you’re trying to expand your credit, it’s always best to do it when you don’t need it. When you’re not desperate for it. Check in with your bank as soon as possible, don’t wait until you get behind. Don’t wait until you struggle with late payments or any of that. You want to get in there, preferably when you’ve got a good credit score, your debt to income ration is good, and you’re not begging for their help.
What you’re doing is you’re saying, hey you want to make this available to me, I can really take it or leave it. That’s kind of the attitude that you need to have if you want banks to be throwing money at you.
One thing you’ll find out is banks love to throw money at people who don’t need to borrow their money, and they hate to give money to people who desperately need to borrow money. So, always try and get your credit card limits increased and your personal lines of credit, either established or increased, home equity lines of credit, try to do all of these things when you aren’t in an emergency situation. Where you don’t have to have the money and it makes it a lot easier to acquire them.
As with all debt weapons and debt elimination tools, that we acquire, we have to be careful that we are using those for the purpose they’re intended. We’re not expanding our credit in order to just make impulse buying decisions. You want to have a plan. You want to make sure that we’re using this for good debt purposes, and that means using it to eliminate our debt.
I always need to put that caveat in there, because we really don’t want you to just expand the amount of debt you have. Our goal is to eliminate that debt and it can be really challenging if you don’t have a plan in place before you get the credit.
Now once you get your personal line of credit, now you can use it just like you would a home equity line of credit in the examples that I’ve shown in previous videos.
So, check out this video here, you’ll be able to see how a home equity line of credit is used to pay down all kinds of debt in a hurry using Dynamic Banking. And really, using Dynamic Banking and a home equity line of credit or a personal line of credit, you can pay off a 30 year mortgage in 5 years! Now, of course, that going to depend on your cash flow. The less money you pay towards other bills, the more you’ll be able to pay that down. And the more your income, the quicker you’ll be able to pay that down. It doesn’t happen by magic, but it does happen and we can accelerate it using this Dynamic Banking strategy!
If you have any questions about personal lines of credit, leave them in the comment section below and we’ll be sure to get those answered for you.
See you next time!
Now, go maximize your cash flow!!!