A line of credit, roughly defined, is the amount of credit that can be given to a borrower from a lender. Usually a contract or note of promissory is exchanged between the two parties, in which both parties agree to the line of credit amount, as well as the annual interest due to the lender at the end of the term.

Line of credit can be anywhere from a paltry sum such as twenty dollars, to a home lone of over twenty thousand dollars. Line of credit speaks volumes about your character and shouldn't be taken lightly. Where and how much your line of credit can be extended is at the sole discretion of the lender. The lender holds all the cards in the transaction, basically.

Qualifying for a good line of a credit is somewhat of a Catch 22, in that in order to qualify for any line of credit you must prove that you have previously been reliable in paying back a previous line of credit. It's like the old adage you may have heard upon graduation from college: "To get a job, you need experience. But to gain experience, you need a job." Sometimes it may feel like there's no way to get the ball rolling, vis a vis your very first line of credit.

One way to prove that you are trustworthy and will pay your line of credit back in full each month (or at least within a reasonable amount of time) is to sign up for a credit card when you're in college.

Most people begin their line of credit this way, because credit card companies often target students to get a line of credit. Be vigilant with your spending, though, or this decision can come back to haunt you. Don't be tempted to squander your line of credit after all, it is not cash because your line of credit rating will follow you wherever you go. In other words, don't spend frivolously. Merely purchase the groceries on the card, and be certain to pay off your monthly balance line of credit each and every time you get your bill online or in the mail. This establishes a good line of credit track record. Banks and other lending institutions will check up on this line of credit record later.