A credit line is another name for a line of credit, a pre-approved borrowing arrangement that lets a person or business borrow up to a set maximum, repay, and borrow again without applying for a new loan each time. Interest is normally charged only on the amount actually drawn. The main entry covers the common types and how credit lines compare with credit cards.
How the term is used
"Credit line" is common in casual speech and in banking for both consumers and companies. Lenders may also use it to mean the maximum amount available, in which case it is a synonym for the credit limit, as in "the bank raised our credit line to $500,000". The context usually makes clear whether the speaker means the facility or its size.
Credit lines are a form of revolving credit. A homeowner may hold a home equity line of credit (HELOC) secured on their property, while a company may use a business credit line, or a larger revolving credit facility, to cover seasonal gaps in cash flow and fund working capital.
In a company's accounts, an unused credit line is not a liability. Only amounts drawn are recorded as debt, usually among current liabilities, although the notes to the financial statements often disclose the size of available lines, any commitment fees and the covenants attached.