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Bad credit increases your risk of early death

Kelly Dilworth

Falling behind on payments won’t just wreck your credit score, it could also increase your risk of early death.

According to new research released by the Federal Reserve Bank of Atlanta, people with bad credit are significantly more likely to die early than people with higher credit scores. Consumers who previously had good credit but fell behind after a financial shock are especially likely to be negatively affected.

“Debt resulting from a financial crisis has lasting effects on health that are substantial enough to increase mortality rates,” wrote Laura M. Argys, Andrew I. Friedson and M. Melinda Pitts in a working paper titled “Killer Debt: The Impact of Debt on Mortality.”

The more overdue debt people owe, the more likely they are to pass away before their time. By contrast, “individuals with better credit risk and smaller amounts of delinquent debt have a lower probability of mortality,” the researchers found.

The researchers looked at credit balances and late payment data pulled from the Federal Reserve Bank of New York’s Consumer Credit Panel and found that consumers who experience a big financial shock and a subsequent drop in their credit score tend to die at significantly higher rates than consumers with healthier finances.

The bigger financial setback a consumer experiences, the more likely he or she is to die an early death, the study found. For example, when a consumer who previously had good credit suddenly falls behind and becomes severely delinquent, his or her mortality risk rises by as much as 5 percent over the next quarter.

The researchers suspect that borrowers’ deteriorating health could be due, in part, to the extreme stress they experience from their overdue debt.

“High levels of delinquent debt could lead to an increase in stress and stress-related behaviors such as poor nutrition and substance use that can have negative health consequences,” the authors wrote.

People may also be less likely to visit the doctor or take their daily medicines. In addition, some people may feel depressed or anxious or struggle with other mental health woes. A number of studies have linked excess debt to poor mental health.

Aggressive debt collectors could also strain consumers.

“The debt collection process is stress-inducing due to its adversarial nature, with a sample of debtors referring to collectors with terms such as, ‘inhuman’ and ‘sadistic,’” wrote researchers. For people who are experiencing their first big setback, the constant strain of adversarial phone calls from collectors could be especially hard to deal with.

The increased risk of death appears to just be temporary, though. The odds that bad credit will negatively affect your physical health tend to fade over time, the study found. “This suggests that if one survives the short-term impact of a delinquency, then the probability of dying in any single quarter declines,” wrote researchers.

In fact, tending to your credit and improving your score over time could be just what you need to live a long and healthy life. The study found that when people increased their credit scores by at least 100 points, their odds of dying early fell by more than 4 percent.

Your bottom line
Treat your credit health with care, as research suggests it’s linked to your physical and mental health. Don’t borrow more than you can afford to reasonably repay in a short period, and keep a healthy amount of emergency cash squirreled away just in case. Your life may depend on it.

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