What Does Winning the Lottery Mean for Your Credit Score?

With the recent Powerball payout of more than $750M to a woman in Massachusetts, I thought it would be interesting to dive into how winning the lottery could potentially affect your credit score.

While not every Powerball winner brings in the crazy amount of $750M, according to LottoStragies.com, the average Powerball winner wins around $145M. If used correctly, this is more than enough to significantly affect your credit score, even in the short term.

Is There a Direct Correlation Between Credit Score and Wealth?

High net worth individuals don’t always necessarily have high credit scores. This is because your credit score is a calculation that helps determine a person’s creditworthiness, rather than a wealth indicator. In fact, credit scores are based on loan and payment history, and don’t take personal assets into consideration at all.

Therefore, there is no direct correlation between credit scores and wealth.

However, while it’s true that having a high net worth doesn’t directly impact your credit score, it does have an effect on your ability to get approved for a loan. When deciding on whether to extend a loan to somebody, lenders will not only look at your credit score, but also make a determination based on your ability to make the payments. This is where wealth and income come into play.

Using Wealth to Improve Your Credit Score

When a person has bad credit, it’s more than likely because they were unable to make their loan payments. This results in late payments, collections, and charge offs ending up on their credit report.

If often takes money in order to get these negative items removed. Therefore, by winning the lottery it puts a person in the position to pay off old debts. This will result in a significant credit score boost.

Credit scores also take into account credit utilization. Credit utilization basically means balance-to-credit limit ratio. The lower the utilization, the higher the credit score. Therefore, a sudden increase in cash allows a person to pay off credit cards and decrease their credit utilization, which will in turn raises their credit score.

Lastly, as we mentioned before, lenders are more likely to lend to people who have a lot of cash. By getting approved for new loans, and having the ability to make on-time payments, a person starts to build new positive credit history. This is another way winning the lottery could improve a person’s credit score.

What to Do If You Win the Lottery

So what should you do if you win the lottery? Well, there are a lot of opinions about that. I tend to take advice from people who have managed (and grown) their wealth consistently over time.

Here is what billionaire Mark Cuban recommends you do if you win the lottery.

  • First of all, hire a tax attorney and get all your taxes out of the way so you don’t ever have to worry about it.
  • Winning the lottery doesn’t make you a smart investor. Rather than invest the money, park it in the bank and live comfortably for the rest of your life.
  • Friends and relatives will more than likely start coming out of the woodworks and asking you for money. Just Say No. A true friend wouldn’t ask anyway.
  • Money makes life more convenient, it doesn’t create happiness.

So if you’re lucky enough to win the lottery, you can easily improve your credit score by paying off old debts, building new positive credit history, and making on-time payments.


  1. Avatar Miguel (The Rich Miser) August 28, 2017
  2. Avatar Marissa Cilamor August 22, 2018

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