Clean-Up Requirement

AAA

DEFINITION of 'Clean-Up Requirement'

A requirement that is often written into the contracts of annually renewable lines of credit. Clean-up requirements can require the borrower to pay off any outstanding balance on the line of credit and then cease to use the line of credit for a specified period of time. Clean-up requirements are usually implemented as a means of preventing borrowers from using lines of credit as ongoing permanent financing.

INVESTOPEDIA EXPLAINS 'Clean-Up Requirement'

Clean-up requirements are becoming less common in banks today. Lenders do not see the need to make their customers "clean up" their lines of credit as long as principal and interest payments are received on time. This requirement is also known as "annual clean-up".

RELATED TERMS
  1. Annual Clean-Up

    A banking practice that requires a borrower to pay off all balances ...
  2. Open-End Credit

    A pre-approved loan between a financial institution and borrower ...
  3. Revolving Credit

    A line of credit where the customer pays a commitment fee and ...
  4. Available Credit

    The unused portion of an open line of credit, such as a credit ...
  5. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
  6. Readvanceable Mortgage

    A mortgage feature that allows the borrower to re-borrow the ...
Related Articles
  1. Credit & Loans

    The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  2. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  3. Budgeting

    How does online banking assist with budgeting?

    Setting up online banking can make a personal budget easier to manage through the use of multiple accounts or expense categories with the same financial institution (for expenses like utility ...
  4. Budgeting

    When Good People Write Bad Checks

    Overdraft protection can help when you overestimate your balance, but it will cost you.
  5. Retirement

    How can a reverse mortgage help wealthy and poor retirees?

    Learn about the ways a reverse mortgage can help both wealthy and poor retirees by allowing them to borrow against their home equity.
  6. Credit & Loans

    Does every inquiry affect a credit score?

    Check a credit report to prevent an overabundance of hard inquiries and to obtain an overall picture of your credit score's health.
  7. Home & Auto

    What are the differences between revolving credit and a line of credit?

    Understand how to differentiate between a line of credit and a revolving credit account, and find out why business owners open revolving credit accounts.
  8. Credit & Loans

    How do secured credit cards help me build my credit score?

    Find out how secured credit cards function and why they can be very useful for those looking to build or rebuild their credit score.
  9. Credit & Loans

    What is the difference between a loan and a line of credit?

    Learn to differentiate between lines of credit and standard loans, and determine when you are likely to use each method of borrowing funds.
  10. Credit & Loans

    What’s the difference between overdraft protection and overdraft settings?

    Learn what overdraft settings are, how they impact your relationship with your bank and how they govern the overdraft protections on your demand accounts.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center