CIBC approved Line of Credit Should I use it or not?

nalan2017 wrote: ↑ Hello friends,

Recently, when I went to bank, they told me that I have been pre-approved "Line of Credit" for CAD10,000 with interest rate of 6.2% (2.7% prime and additional 3.5%). I have few queries, kindly help me.

1) Is it good rate interest for "Line of Credit"?

It's not horrible. I wouldn't say it's "good" ... see: https://forums.redflagdeals.com/please- ... s-1834473/

nalan2017 wrote: ↑ 2) If I borrow money from "Line of Credit", will it affect my credit score?

Yes. Utilization is a portion of your score which measures how much you use your limits. If you get the LOC you will have a temporary hit to your score from the inquiriy, and then if you use it, you will see your score change depending on what % of your limit you use as well as how that factors into your total overall usage of all of your limits combined.

nalan2017 wrote: ↑ 3) I am planning to borrow around $6000(CAD) for my education loan and planning to repay the principal amount and interest in 3 years, that comes around $200 monthly. Is it a good idea or not? any suggestions are very welcomed.

nalan2017 wrote: ↑ 4) Right now, I have only one credit card with credit limit of $6,500 (CAD). Currently, my debt/credit ratio is below 30%. If I borrow $6000(CAD) from "Line of Credit" will it affect my debt/credit ratio and lower my credit score?

Yes. See answer to #2.

$6k / $10k = 60% utilization on the LOC trade line
$1k / $6.5k = 15% utilization on the CC trade line

$7k / $16.5k = 42% overall utilization.

If you can get a student loan or other loan for a good rate that may be a better way to go. You might still consider getting the LOC if you have the discipline to leave it untouched and only use in case of true emergency.

nalan2017 wrote: ↑ 3) I am planning to borrow around $6000(CAD) for my education loan and planning to repay the principal amount and interest in 3 years, that comes around $200 monthly.

Not sure if that means you plan to pay it off within 3 years or start paying it in 3 years.
If the latter, you will usually have to pay a minimum of interest + $10/ month or ~$40/month till you start paying down the principle.