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Bad Credit Rating - but cash rich!

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Hello all, 

Hoping someone can help. I currently have a poor credit rating having entered into an arrangement with credit card providers just over a year through StepChange Debt Charity. My circumstances have, however, changed massively in the last couple of months in that I have inherited a significant sum of money. I will shortly be paying off all my debts which leads me to my question: does being ‘cash rich’ improve your credit rating? For example, I want to open a couple of new bank accounts with join bonuses but despite being in a position whereby I can deposit large sums of cash, I wonder if I would even get that far? Further down the line I will be investing in property and may wish to take out a mortgage - again, will my poor credit rating likely hold me back? If you’ve made it this far thanks for reading!

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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    No - savings aren't factored in by lenders as you can spend them at any time.  Lenders will look at your history and circumstances, not your credit rating.

    When you come to apply for a mortgage, you'll need to apply to a lender that suits your risk profile. Use an adverse credit broker/
  • If you want to invest in property then I'd start building my credit rating asap to make the most of the inheritance. Having cash is one thing but showing the banks that you can and will pay them back is a completely different story.
  • Hello all, 

    Hoping someone can help. I currently have a poor credit rating having entered into an arrangement with credit card providers just over a year through StepChange Debt Charity. My circumstances have, however, changed massively in the last couple of months in that I have inherited a significant sum of money. I will shortly be paying off all my debts which leads me to my question: does being ‘cash rich’ improve your credit rating? For example, I want to open a couple of new bank accounts with join bonuses but despite being in a position whereby I can deposit large sums of cash, I wonder if I would even get that far? Further down the line I will be investing in property and may wish to take out a mortgage - again, will my poor credit rating likely hold me back? If you’ve made it this far thanks for reading!
    In addition to the comments above, by the sound of it with your agreement through StepChange you have, but you need to make sure all the issues with why you got into debt in the first place have been addressed, so that it does not happen again.

    Also, how much inheritance are we talking, a couple hundred thousand, several hundred thousand, seven figures? How much will depend on how you invest, whether property will be a good investment or other markets may be better, as well as what impact any of that might have on a potential residential mortgage for a property for you to live in, as well as long term security of income. 
  • Debt was 35k, now reduced to 25k in last 12 months. Inheritance net will likely be approx 375k. The initial plan will be to purchase a rental outright, I.e. with cash so the mortgage issue won’t really come into play until next year when I plan on purchasing a second rental. Even the smaller things such as availing of the ‘open a new bank account and we’ll give you £200’ offers - I fear these may not be possible, despite being able to deposit a decent lump of cash.

    StepChange said the default on credit card payments will stay on record until 6 years after settlement so I may just have to suck it up.

    As for the cause of the debt, she’s long gone!

  • StepChange said the default on credit card payments will stay on record until 6 years after settlement so I may just have to suck it up.

    They've misled you. The default falls off 6 years from being put on.
  • My mistake - extract of DMP below: “Details of court action, defaults, partial payments and missed payments are recorded for six years. They are removed six years from the date it happened, even if the debt hasn’t been fully repaid. When your DMP ends you can improve your credit score by using credit sensibly.” Thank you for pointing this out.
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