Falling Behind on Bills Could Be Sign of Coming Dementia

3 min read

July 9, 2024 – Declining credit rating scores later in life may be an early warning sign of dementia, according to a new analysis published by the Federal Reserve Bank of New York.

Credit scores are used to predict a person’s likelihood to pay back a loan on time and are important for people seeking a mortgage, credit card, or car loan. Factors that can influence a person’s credit score include their history of paying bills on time – including medical bills -- current unpaid debts, how much available credit is being used, new applications for credit, and whether any debts have been sent to collection or resulted in foreclosure or bankruptcy.

The new report, titled “The Financial Consequences of Undiagnosed Memory Disorders,” is based on reporting data from credit agency Equifax that was merged with Medicare data by linking people’s Social Security numbers. The analysis was based on a representative sample using data spanning 14 years for more than 2.4 million people. The estimated incidence of Alzheimer’s disease or related disorders was nearly 1% among people ages 65 to 74, nearly 3% for people ages 75 to 84, and just over 6% for people ages 85 and older.

In the 5 years before a diagnosis of Alzheimer’s disease or similar condition, people were more likely to be late on payments, the researchers found.

“The harmful financial effects of undiagnosed memory disorders exacerbate the already substantial financial pressure households face upon diagnosis of a memory disorder,” the authors wrote. “Our findings substantiate the possible utility of credit reporting data for facilitating early identification of those at risk for memory disorders.”

Late payments of credit card bills were seen for 5 years prior to diagnosis, and patterns of late payments by mortgage borrowers were observed for 3 years before diagnosis. 

Specifically, at 2 years before diagnosis, the researchers reported a 21% increased likelihood of late credit card payments and an 11% increased likelihood of late mortgage payments, compared to payment trends 6 years before people were diagnosed. The average delinquent mortgage balance was $2,910 among those who were eventually diagnosed, and the average delinquent credit card balance among cardholders eventually diagnosed was $384.

“These changes also reduce access to credit and affect credit limits and interest rates on credit cards and personal loans — all at a time when the demand for household financial resources is likely to increase to pay for the substantial caregiving and related costs associated with later stages of memory disorders,” the authors wrote.

Cognitive function has long been linked to a person’s financial behavior, from a person’s wealth and investment performance to mortgage and credit card problems, the report authors noted. Previous research has suggested that in addition to poor financial decision-making, people with cognitive impairments are at increased risk of financial exploitation.

Trouble paying bills on time has long been on the list of potential early warning signs of dementia, plus other cognitive changes that affect memory, thinking, and reasoning. Psychological changes are also possible, and symptoms vary from person to person. Most diagnoses of dementia are made after a person turns 65 years old.