Etrade Line Of Credit: Does ETrade Do A Credit Check?LAST UPDATED: April 30, 2023 | By Conrad Golly
Knowing whether a brokerage company does a credit check can be game-changing. You can use this information to strengthen your reliability as a trader before setting up an account. And, thus, increase the chances of approval. So, does Etrade do a credit check for the etrade line of credit?
Etrade does not conduct a credit check for a simple account setup. However, applicants for the Etrade Line of the Credit Facility will get assessed against their credit history. A good credit score for approval is 700 and above.
Wait a minute; there’s still a lot more to this topic.
In this post, I’ll go through the complete process of Etrade credit checking. I will also discuss what Etrade LOC is. Let’s get started!
When does Etrade do a credit check?
Almost every other brokerage company performs a credit check before approving a user account. However, Etrade seems to adopt a different approach towards things.
When setting up an account, Etrade will offer you different options to consider and choose from. These include a small business retirement account, retirement account, managed portfolio, and brokerage account.
As there is a diversity of account types available, Etrade has not made credit checking compulsory at this stage. It is only when you apply for the Line of Credit facility that Etrade will do a credit check.
What is the Etrade Line of Credit facility?
|Etrade Line of Credit|
|Service offered to all Etrade users|
|Enables users to take a loan from the company at a particular interest rate|
|Money obtained through this loan is usable for every lawful purpose, except for trading, carrying, or purchasing of securities and margin loan repayment|
|Primarily for trader’s use|
|Helps secure long-term investment plans in financially difficult times|
|Users must prove themselves trustworthy during credit checking|
Etrade Line of Credit is a service offered to all Etrade users. It enables them to take a loan from the company at a particular interest rate. The money obtained through this loan is usable for every lawful purpose, except for:
- Trading, carrying, or purchasing of securities
- Margin loan repayment
So, as an applicant, you can use the money for business, property purchases, and whatnot. However, Etrade LOC is primarily for trader’s use.
To understand this better, let’s suppose you are a trader at Etrade who has been investing in stocks for a while. Suddenly, there comes a time when your available funds are too low to continue the plan. In this scenario, you can apply for the LOC loan, use it for trading, and return the amount sometime later.
Hence, Etrade LOC helps secure long-term investment plans in financially difficult times. You can keep on working on your strategy and benefit from the profits. But, to use this trump card, a trader must first prove himself trustworthy during the credit checking.
How does Etrade credit checking work?
An Etrade credit check is quite a simple process. Once you submit the LOC application, the management will take a few business days to review it.
There is no fixed number of days provided by Etrade. Typically, it can take them anywhere from 2 to 5-business days to respond. They may make a confirmation call at the time of LOC application submission.
During this time frame, Etrade will go through your credit history to determine your loan eligibility. They will evaluate the number of times you have taken loans in the past and repaid them. They will also assess your financial health over the years to decide whether you can make timely repayments.
For a successful credit check, you must have a good credit score. Etrade has not specified its criteria, though the standard good credit score is 700 and above. In most cases, Etrade approves the application even if you have an average credit score.
Hopefully, all of your Etrade credit checking queries and confusion must be clear by now.
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FAQs: Etrade Line Of Credit
Does Etrade offer line of credit?
Yes, E-Trade offers a line of credit called the Securities-Backed Line of Credit (SBLOC). This type of credit uses the investments in a customer’s taxable brokerage account as collateral to back a revolving line of credit.
Can you borrow money from your Etrade account?
Yes, customers with an E-Trade Securities-Backed Line of Credit (SBLOC) can borrow money from their account.
What is margin call on Etrade line of credit?
A margin call on an E-Trade Securities-Backed Line of Credit (SBLOC) occurs when the value of the securities in a customer’s account used as collateral for the line of credit falls below a certain threshold. When this happens, the customer may be required to deposit additional funds or securities into their account to bring it back up to the required collateral level.
Does Etrade offer a credit card?
No, E-Trade does not currently offer a credit card. However, they do offer a debit card for customers to access their account funds.