Best Personal Lines of Credit
Best Personal Lines of Credit
If you have regular borrowing needs that can't be covered by a credit card but aren't sure how much you'll need for a term loan, a flexible personal line of credit might be the answer for you.
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To help you find the right option, we've compared over a dozen credit lines and compiled a list of the best line of credit providers available.
Best Unsecured Personal Line of Credit: KeyBank
KeyBank provides the tightest range of rates on its standard unsecured credit line, ranging from 10.74% - 15.99%. While KeyBank’s isn’t the lowest unsecured rate offered, KeyBank’s listed 15.99% upper limit helps unsecured borrowers with moderate credit scores establish a reasonable ceiling on their interest rates.
Additionally, KeyBank offers an unsecured small-dollar line of credit for up to $5,000, which beats out Regions Bank’s small-dollar offering of $3,000. To apply with KeyBank, you must open an account with the bank and live near a branch in Alaska, Colorado, Connecticut, Idaho, Indiana, Massachusetts, Maine, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont or Washington.
Unsecured lines of credit won’t offer the lowest rates around, but they are a good option for borrowers with solid credit profiles who lack collateral. Borrowers who aren’t able to qualify on their own can also obtain a co-signer or co-applicant.
Drawbacks: Like other regional banks, KeyBank isn’t widely accessible to all interested applicants. Wells Fargo is a good alternative, as the lender has the largest network of branches of any line of credit provider we’ve reviewed. Wells Fargo also offers the largest unsecured credit line of $100,000, making it particularly attractive to borrowers with large credit appetites.
Best Secured Personal Line of Credit: Regions Bank
Regions Bank (Regions) was our top pick for the best non home-equity secured line of credit provider because of its low APRs, flexible terms and wide accessibility. The lender provides the tightest APR range of any secured line of credit provider—between 7.5% and 8.5% —and allows you to renew your credit line annually, with no limits on the number of renewals.
Secured credit lines can be opened with as little as $250 or as much as you’re willing to deposit into your account, up to $100,000. You have the option of securing your line of credit with a Region’s CD account, savings account or money market account. Regions also obtained a very attractive A+ rating with the Better Business Bureau, and it even allows applications from non-U.S. citizens.
A secured line of credit is a great option for borrowers with blemishes on their credit records. It allows borrowers to secure the lowest possible interest rates on their lines of credit while increasing their likelihood of approval. However, lenders will have the right to repossess the collateral, should you fail to pay your debts.
Drawbacks: Borrowers living outside Region’s 15 states of influence will have difficulty obtaining a credit line, as line of credit applications require a branch visit. For borrowers looking for more geographic coverage, we recommend Wells Fargo, which has a much wider branch footprint and also permits secured lines of credit for up to $250,000.
Best Personal Line of Credit for Bad Credit: PenFed
Pentagon Federal Credit Union (PenFed) was our top choice for borrowers with low to fair credit scores; PenFed and other credit unions are usually more willing to work with poor-credit members to structure appropriate financing terms.
Joining is easier than you think, as membership with PenFed is open to anyone willing to donate to either the National Military Family Association or Voices for America’s Troops. The interest rates on all credit union loans and lines of credit are capped at 17.99% APR, whereas many banks may charge up to 36%. PenFed members with low credit scores may strengthen their applications by obtaining a co-signer.
The 14.65% rate on PenFed’s line of credit is higher than the average rate on most other lines, but it has the benefit of having a fixed rate, which is unusual. This ensures that your rate will not change for as long as your line of credit remains outstanding. Interested applicants must join PenFed to apply.
Drawbacks: Lines of credit are typically reserved for customers with better credit quality and applicants with PenFed may still be rejected. For borrowers who don’t want to join a credit union or don’t qualify with PenFed, we also recommend trying KeyBank or Santander. These are two large regional banks that don’t list explicit credit requirements for their products. Both KeyBank and Santander also allow co-signers and co-borrowers on their applications, which gives you flexibility if your credit score doesn’t stand up on its own.
Best Personal Line of Credit for Home Improvement: Wells Fargo
Our top choice for the home improvement category was Wells Fargo, due to their varied financing options and high loan limits. Generally speaking, we strongly recommend that borrowers with sufficient home equity first consider a home equity line of credit (HELOC) for their home renovation needs, as the interest expense is usually lower than the interest on unsecured lines of credit.
For relatively new homeowners lacking home equity, a personal line of credit with Wells Fargo can be a viable option. Wells Fargo offers the highest borrowing caps on both secured and unsecured lines of credit at $250,000 and $100,000 respectively. Borrowers can secure their credit lines with savings/CD accounts, which will net them Wells Fargo’s most competitive rates. The lender also offers a decent 10.5% variable unsecured line of credit for good to excellent credit borrowers.
Wells Fargo’s lines of credit last five years for unsecured lines and 10 years for secured lines, which falls within the time frame of most home renovations. However, the variable rates on most lines of credit means that your interest rate may change with the market—this makes long-term borrowing more risky. Borrowers interested in a personal line of credit with Wells Fargo must have an existing account with the bank. The lender also prefers customers with good to excellent credit, especially if they intend to draw large sums.
Drawbacks: Applicants may have difficulty securing a competitive interest rate without good credit or collateral. For borrowers with credit issues, we recommend checking with smaller regional banks like KeyBank or Regions Bank, as they have comparable rates to Wells Fargo but cater to a wider credit spectrum. It’s also worth checking with your local bank or credit union where you’ve already established a banking relationship, as they’re usually more willing to provide favorable terms to existing customers.
Summary of Our Top Picks
For a quick comparison, we summarized the best companies for personal lines of credit, according to usage. We evaluated each provider on a specific set of criteria, as explained in the methodology section below.
Best for… | Lender | APRs | Loan Amounts |
|---|---|---|---|
| Unsecured line of credit | KeyBank | 10.74% - 15.99% | $2,000 - $50,000 |
| Secured line of credit | Regions Bank | 7.50% or 8.50% | $250 - $100,000 |
| Bad credit | Pentagon Federal Credit Union | 14.65% - 17.99% | $500 - $25,000 |
| Home improvement | Wells Fargo | 7.00% - 10.50% | $5,000 - $250,000 |
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Our Methodology
We evaluated over a dozen line of credit products to find the best personal lines of credit. In our review, we considered the following criteria:
- Competitive APRs: Personal lines of credit come in secured and unsecured formats. Due to the inherent risk factors involved in unsecured revolving credit, many lenders will charge higher rates on lines of credit than installment loans.
- Range of loan amount and terms: Most personal lines of credit are structured in cycles where the APR adjusts monthly with the prime rate. Some lines may also be divided into separate spending and repayment periods. We evaluated the amount of flexibility each lender permitted in their loan amounts and term lengths.
- Fees: Many lenders charge an annual maintenance fee. Other lenders charge prepayment penalties in addition to separate processing fees. We evaluated this factor based on the size and prevalence of incidental charges.
- Lender accessibility: Many banks do not allow noncustomers to open a personal line of credit. This limits access to many lenders depending on where you bank. We graded this factor based on the eligibility requirements and lender locations. Some lenders may allow you to complete the entire application process online.
- Lender credibility: We reviewed outstanding complaints filed under each lender through the Better Business Bureau as well as the reputation of the company itself. Ratings of "NR" may indicate that details related to the business were being updated as of the time of our review, or that the company was delisted as a result of BBB internal policies.
Where to Shop for a Personal Line of Credit
If your bank offers credit cards and checking accounts, you may be able to apply for a personal line of credit with your local bank branch. Many local and regional banks are also able to provide personal lines of credit to existing customers.
Personal lines of credit are a revolving credit, which prevents them from being offered by many online lenders. Most of the industry for credit lines is dominated by big banks and credit unions, entities with sufficient capital to sustain a revolving credit type service. Our selection of providers above does not encompass every line of credit provider within the United States, but it can be used as a guide for comparison shopping.
Kenny is a Banking and Mortgage Research Analyst for ValuePenguin and has worked in the financial industry since 2013. Previously, Kenny was a Senior Investment Analyst at PFM Asset Management LLC. He holds a Bachelors of Science from Carnegie Mellon University, where he majored in International Relations & Politics. He is a CFA® charterholder.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.