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Yahoo
19 hours ago
- Business
- Yahoo
Why Equitable Holdings, Inc. (EQH) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns. Equitable Holdings, Inc. (EQH) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of 12.08% since the start of the year. The company is currently shelling out a dividend of $0.27 per share, with a dividend yield of 2.04%. This compares to the Insurance - Multi line industry's yield of 1.84% and the S&P 500's yield of 1.59%. Looking at dividend growth, the company's current annualized dividend of $1.08 is up 14.9% from last year. Over the last 5 years, Equitable Holdings, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.95%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Equitable Holdings's payout ratio is 16%, which means it paid out 16% of its trailing 12-month EPS as dividend. EQH is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $6.55 per share, representing a year-over-year earnings growth rate of 10.46%. Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout. High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, EQH is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Equitable Holdings, Inc. (EQH) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Yahoo
a day ago
- Business
- Yahoo
Is There An Opportunity With Ansell Limited's (ASX:ANN) 42% Undervaluation?
The projected fair value for Ansell is AU$52.53 based on 2 Stage Free Cash Flow to Equity Current share price of AU$30.54 suggests Ansell is potentially 42% undervalued Our fair value estimate is 45% higher than Ansell's analyst price target of US$36.17 Today we will run through one way of estimating the intrinsic value of Ansell Limited (ASX:ANN) by taking the expected future cash flows and discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$163.9m US$220.1m US$235.6m US$247.5m US$258.4m US$268.6m US$278.5m US$288.1m US$297.6m US$307.1m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Est @ 5.04% Est @ 4.41% Est @ 3.97% Est @ 3.67% Est @ 3.45% Est @ 3.30% Est @ 3.20% Present Value ($, Millions) Discounted @ 7.6% US$152 US$190 US$189 US$184 US$179 US$173 US$166 US$160 US$154 US$147 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$1.7b The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.9%. We discount the terminal cash flows to today's value at a cost of equity of 7.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$307m× (1 + 2.9%) ÷ (7.6%– 2.9%) = US$6.8b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$6.8b÷ ( 1 + 7.6%)10= US$3.2b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$4.9b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of AU$30.5, the company appears quite good value at a 42% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Ansell as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.6%, which is based on a levered beta of 1.080. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Ansell Strength Earnings growth over the past year exceeded its 5-year average. Debt is not viewed as a risk. Dividends are covered by earnings and cash flows. Weakness Earnings growth over the past year underperformed the Medical Equipment industry. Dividend is low compared to the top 25% of dividend payers in the Medical Equipment market. Opportunity Annual earnings are forecast to grow faster than the Australian market. Good value based on P/E ratio and estimated fair value. Threat Annual revenue is forecast to grow slower than the Australian market. Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Ansell, we've put together three further aspects you should further examine: Risks: For example, we've discovered 1 warning sign for Ansell that you should be aware of before investing here. Future Earnings: How does ANN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
a day ago
- Business
- Yahoo
GMS Inc (GMS) Q4 2025 Earnings Call Highlights: Navigating Challenges with Strategic Gains
Full Year Net Sales: $5.5 billion, up marginally compared to the prior year. Organic Sales: $5.2 billion, down 5.4% on a same-day basis compared to the prior year. Full Year Net Income: $115.5 million, inclusive of a $42.5 million noncash goodwill impairment charge. Adjusted EBITDA: $500.9 million. Free Cash Flow: $336.1 million, or 67% of adjusted EBITDA. Fourth Quarter Net Sales: $1.3 billion. Fourth Quarter Organic Sales Decline: 8.3% per day. Fourth Quarter Net Income: $26.1 million. Fourth Quarter Adjusted EBITDA: $109.8 million. Cash from Operating Activities (Q4): $196.8 million. Fourth Quarter Free Cash Flow: $183.4 million, or 167% of adjusted EBITDA. Cost Savings Program: $55 million in annualized cost savings during fiscal 2025. Net Debt Reduction: More than 10% during the quarter. Leverage Ratio: 2.4 times adjusted EBITDA. Share Repurchase: 348,600 shares for $26.4 million during the quarter. Warning! GuruFocus has detected 4 Warning Signs with LVRO. Release Date: June 18, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. GMS Inc (NYSE:GMS) reported net sales of $5.5 billion for the full year, driven by positive contributions from recent acquisitions. The company achieved a record quarterly free cash flow conversion, with $183.4 million or 167% of adjusted EBITDA generated during the fourth quarter. Ceilings and Complementary Products saw volume improvement during the quarter, with Ceilings benefiting from strategic focus on Architectural Specialties projects. GMS Inc (NYSE:GMS) implemented a significant cost savings program, achieving $55 million in annualized cost savings during fiscal 2025. The company reduced net debt by more than 10% during the quarter, maintaining a target debt leverage range of 1.5 to 2.5 times. Organic sales for the year were down 5.4% on a same-day basis compared to the prior year. Net income for the full year was impacted by a $42.5 million noncash goodwill impairment charge recorded in the third quarter. The company faced ongoing macroeconomic challenges, with organic sales declining 8.3% per day in the fourth quarter. Wallboard sales were down 10.1% year-over-year, with single-family volumes in the US down 1.9% per day. Commercial activity was negatively impacted by high interest rates and economic uncertainty, contributing to soft starts and mixed results. Q: JT, you mentioned that sequential organic trends would be seasonally better next quarter. Could you explain why you feel that way? A: John Turner, President and CEO, explained that the improvement is primarily in the single-family market, where they have gained some share with larger customers. He noted that recent commentary from major builders like Lennar and Horton suggests the market is not as dire as it might seem, and GMS is experiencing normal seasonality with some improvement in single-family. Q: Can you discuss the technology and efficiency optimization efforts and the $25 million in annualized savings? Are there additional digital benefits beyond what you've already outlined? A: John Turner highlighted that GMS has continued to invest in digital efforts, including customer portals and e-commerce, which have contributed to cost savings. They are also exploring AI applications for order entry automation. Scott Deakin, CFO, added that the common ERP platform across the US footprint enhances the effectiveness of these technologies. Q: Regarding the single-family market, how do you view the share gains and the pressure from builders for concessions? A: John Turner stated that GMS is leveraging its scale to assist builder partners, maintaining strong relationships throughout the supply chain. He noted that GMS has gained share recently and has regional strength due to strategic greenfield activities and acquisitions, such as RS Elliot in Florida. Q: How do you view the margin dynamics and the 10% to 12% EBITDA margin target? How much is dependent on market outcomes versus internal improvements? A: John Turner explained that while market recovery is necessary for volume growth, internal improvements such as cost structure optimization and product mix enhancements contribute significantly. He estimated that about half of the margin improvement would come from market recovery and half from internal efficiencies. Q: What is your visibility into the single-family market, and how do you see start activity flowing into shipments? A: John Turner mentioned that GMS typically sees a three to six-month lead time from starts to shipments, with visibility primarily for the upcoming quarter. He expressed optimism that the market would bottom out and improve by the next spring selling season, given the historical cycle of home starts. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Calculating The Intrinsic Value Of Carr's Group plc (LON:CARR)
The projected fair value for Carr's Group is UK£1.60 based on 2 Stage Free Cash Flow to Equity Carr's Group's UK£1.49 share price indicates it is trading at similar levels as its fair value estimate The UK£1.70 analyst price target for CARR is 6.5% more than our estimate of fair value Today we will run through one way of estimating the intrinsic value of Carr's Group plc (LON:CARR) by taking the expected future cash flows and discounting them to today's value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. There's really not all that much to it, even though it might appear quite complex. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) UK£700.0k UK£2.75m UK£6.60m UK£6.88m UK£7.13m UK£7.37m UK£7.60m UK£7.83m UK£8.05m UK£8.27m Growth Rate Estimate Source Analyst x2 Analyst x2 Analyst x1 Est @ 4.21% Est @ 3.71% Est @ 3.36% Est @ 3.11% Est @ 2.94% Est @ 2.82% Est @ 2.74% Present Value (£, Millions) Discounted @ 6.6% UK£0.7 UK£2.4 UK£5.4 UK£5.3 UK£5.2 UK£5.0 UK£4.8 UK£4.7 UK£4.5 UK£4.3 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£42m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.5%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£8.3m× (1 + 2.5%) ÷ (6.6%– 2.5%) = UK£207m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£207m÷ ( 1 + 6.6%)10= UK£109m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is UK£151m. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of UK£1.5, the company appears about fair value at a 6.9% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Carr's Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.6%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Carr's Group Strength Debt is not viewed as a risk. Weakness Dividend is low compared to the top 25% of dividend payers in the Food market. Opportunity Expected to breakeven next year. Has sufficient cash runway for more than 3 years based on current free cash flows. Current share price is below our estimate of fair value. Threat Paying a dividend but company is unprofitable. Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Carr's Group, there are three pertinent items you should further research: Risks: To that end, you should be aware of the 1 warning sign we've spotted with Carr's Group . Future Earnings: How does CARR's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every British stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
3 days ago
- Business
- Yahoo
What is a personal line of credit and how does it work?
A personal line of credit is a revolving account that works like a credit card. Personal lines of credit are unsecured with variable rates that are typically much lower than credit card interest rates. You can take out a line of credit for business purchases or for personal use. If you're trying to avoid the high rates that come with credit cards, but retain the flexibility of revolving credit, a personal line of credit is worth considering. A personal line of credit can help you cover unexpected expenses, fund major projects or fill temporary cash flow gaps. However, unlike a credit card, the account's funds can only be used and reused for a set time called a draw period. When it ends, you're no longer allowed to make withdrawals and will need to reapply to keep the personal line of credit open. A personal line of credit, or PLOC, is an unsecured revolving account with a variable interest rate. The monthly payment is based on the amount you use, and you can use and reuse it as needed and pay back with interest, much like a credit card. PLOCs generally have lower interest rates than credit cards, so they're typically cheaper for big cash advances. They're also a helpful tool for managing daily cash flow if you have irregular income from self-employment or a seasonal business. If you have ongoing expenses, like medical bills or wedding planning, a PLOC's revolving nature can give you flexibility to spread the payments. You'll find a lot of similarities between credit cards and personal lines of credit. The line is approved based on a review of your credit score and income. Once you're approved, you can tap the money on a mobile app or by withdrawing funds at a local branch. The monthly payment and interest charges are only accrued on the amount you use. For example, if you get a $10,000 personal line of credit but only need to use $1,000, your payment is only based on the balance you carry. One difference from credit cards is the draw period, which only gives you two to five years to keep borrowing and repaying up to the limit. At the end of that period, you'd have to re-apply or pay the balance in full. While they're less common than personal loans, some financial institutions, including banks and credit unions, offer PLOCs. You'll need a good credit score and a solid credit history to qualify for a personal line of credit. 'You want to have the best credit you can have,' Dave Sullivan, credit expert with People Driven Credit Union, said. 'If you have any revolving lines of credit, it's best to pay those down as low as you can prior to applying, and make sure that info has been reported to the credit bureaus.' Check with multiple lenders to see who will give you the best terms. You will want to consider interest rates, repayment terms and the length of the draw period. The application process for a PLOC is much the same as applying for any loan, and it can often be completed online. Once you've decided on a lender and the credit limit you're seeking, you'll need to provide documentation to verify your identity and income. Personal lines of credit give you access to credit as you need it. You may receive a credit card or be able to access funds by transferring them to your bank account online. Banks and credit unions may allow you to transfer funds from your line of credit directly into your checking or savings account. You can use as much or as little of the account's maximum amount at once as you wish. Just make sure you keep track of when the draw period ends — you won't be able to access funds once it expires. Your payment will vary based on the amount of credit you've used. It's important to pay attention to how the monthly payment changes each month to avoid accidently underpaying the amount due. You may not see charges or payments on the account depending on when you access the funds and when your payment is due. The structure of repayment can vary by lender. Common structures include: Draw and repayment periods: This is the most common type of repayment used for a PLOC, as described above. Typically, monthly payments are required during the repayment period. Balloon payments: This type of repayment requires that the full balance is due at the end of the draw period. Demand line of credit: While not very common, some lenders may set up a PLOC as a demand line of credit. This means the lender has the right to ask for full repayment at any time. If you plan to close your account out after the draw period ends, find out if there are any fees for doing so. Personal lines of credit are temporary. You'll have a finite period during which you may withdraw funds, called a draw period. If you still have an unpaid balance when the draw period ends, you'll enter the repayment period. When setting up your personal line of credit, ensure you understand your lender's repayment terms and make a plan that best suits your finances. If you're not sure that a PLOC is for you, you have several other options to choose from. Some are revolving, but will be secured by your home (like a home equity line of credit). Others are installment loans like personal and home equity loans, with a fixed payment for a set time period. Personal loans and personal lines of credit are completely different. A personal loan is a type of installment loan. You receive all the funds at once and make payments on the full amount you borrow. It comes with a fixed rate, payment and is repaid typically over one to seven years. It's a good option if you need all the money at once for debt consolidation, emergencies or even to buy an old car that auto lenders won't finance. A personal line of credit may give you a lower monthly payment if you don't want or need to use all of the funds immediately. However, because the rate is variable, the payment is more unstable. Making the minimum payment due could keep you in debt longer than if you had a set payment with a personal loan. The decision between a personal line of credit and a credit card comes down to rate, qualifying requirements and flexibility. There are credit cards for all types of credit types, whereas PLOCs are usually reserved for higher credit score borrowers. That typically means rates are higher on credit cards versus personal lines of credit. You also won't have a draw period with a credit card. The account will retain its revolving credit feature for as long as it's open. However, that makes it easier to carry a balance longer than you would with a PLOC since you have a limited draw period. A home equity loan is a fixed-rate installment loan with terms ranging between 15 and 30 years and rates that are typically much lower than PLOCs. Interest is tax-deductible if you use the funds for home improvement. However, because a home equity loan is secured by your home, you risk losing your home if you default. HELOCs and personal lines of credit give you the same flexibility of using and repaying the balance as you wish. A HELOC also features a draw period, however, it's often much longer, extending out to 10 years at many lenders. It has the same tax benefits as a home equity loan if you use the funds to renovate your home. It also has the same risk of losing your home to foreclosure if you can't repay it since it's secured. If a personal loan is the right choice for your borrowing needs, consider Bankrate's top picks for the best rates. Learn more Access to funds as needed Overdraft protection on some accounts Lower rates than credit cards Payment is only based on credit used Variable rates may lead to a higher payment Limited draw period compared to credit cards, which have no draw period Higher rates than HELOCs Typically need high credit scores to qualify Like a credit card, a personal line of credit can be used on a revolving basis as needed. Borrowing money this way has many advantages, including providing quick access to cash and offering more competitive rates than credit cards. But you'll need a solid credit history to qualify and there's a risk of overborrowing if you don't have a history of using credit responsibly. Be sure to shop around and find the best interest rate and terms for your financial needs. What happens if I never use my line of credit? You only pay interest on the funds you pull from a personal line of credit. Still, you could be on the hook for administrative fees, even if you decide not to use the line while it is open. Does a personal line of credit affect my credit score? Applying for a personal line of credit requires a hard credit pull that will dip your score by a few points, but the impact is typically short-lived. As you borrow against the credit line, your score may fall since your credit utilization ratio will rise. However, if you repay the debt as agreed and keep the outstanding balance at or below 30 percent of the credit limit, your credit score can rise over time. Is it easier to get a loan or a line of credit? You can get a personal loan with less-than-perfect credit, but it may be a bit more challenging to qualify for a line of credit if your score is on the lower end. In fact, most lenders require good or excellent credit to qualify for a PLOC. A limited credit history can also be a deal-breaker. 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