Going back to the concept of making cash flow match up, a line of credit can be used to smooth out irregularities in either income or expenses. For example, a person who earns commissions or does freelance work may earn enough over the course of the year to meet expenses, but not always have the right amount of cash on hand from month to month. Or, in terms of expenses, a person may be facing a series of unusually large expenses that cannot be immediately covered by normal income.
In situations like that, a line of credit makes the necessary amount of money available to the borrower without the nuisance — and uncertainty — of having to apply for a separate personal loan each time one of these needs arises. This is how a personal line of credit can smooth out periodic mismatches between income and expenses.