Decide between a loan and a line of credit? Here are some guidelines:

• Go for a line of credit if you're not sure how much, or even if, you need to borrow. For continuing expenses--say,
helping a child with college bills--a line of credit makes sense because you can take the money on an as-needed basis.
An unused line of credit can also provide a safety net against a job loss or other emergency expenses.

That said, lines of credit are considered revolving debt by credit scoring companies. If you max out your line, you'll hurt your score. Loans, on the other hand, are considered installment debt and will help your score as long as you always pay on time.

• Go for a line of credit if you can repay the loan in four years or less. Because the interest rate on the average line of credit is nearly three percentage points below the rate on the average loan, you should come out ahead with a line of credit even if rates rise by one percentage point each year--and few experts think they'll go up much faster.
(The converse, of course, is also true: Go with a home-equity loan if it will take you more than four years to repay.)

• Choose a home-equity loan if you might not be able to resist borrowing extra. Let's face it: A line of credit that you can draw on anytime is pretty much a $25,000 wad of cash sitting in your desk drawer. You might find yourself blowing $3,000 of it on a wide-screen TV. And eager lenders have all but encouraged that kind of behavior. Some banks, including Wells Fargo, even offer a product that lets you draw on your HELOC at retailers using a charge card. "Our experience is that customers are very self-conscious about using their home equity," says Doreen Woo Ho, the president of Wells Fargo's consumer credit group. Maybe. But do you really want that kind of temptation?