Credit Sesame explores how credit scores and dementia may be connected. A new study suggests declining credit habits could be an early warning sign of cognitive decline.
Discussion of credit scores often centers on young people starting to build credit or people trying to rebuild credit after financial trouble. However, a new study shows that credit scores can also be important as an indicator of mental health as people grow older.
The study found that missed payments and declining credit scores can be early warning signs of Alzheimer’s disease and other forms of dementia. That means monitoring credit scores remains crucial even as you or your loved ones approach retirement.
Credit use declines as people reach retirement age
People may pay less attention to their credit scores in their later years because they have less need for credit.
According to the Federal Reserve’s Survey of Consumer Finances, just 53.4% of people aged 75 or older had any form of debt. This is the lowest percentage of any adult age group and well below the 77.4% of the general adult population.
The median amount of debt held by people aged 75 or older is $36,000. That’s the lowest of any age group and less than half the median for all adults of $80,220.
There are two simple reasons why older Americans tend to borrow less than other adults. They tend to spend less, and they have more wealth. So, with less need for credit, why worry about credit scores?
Good credit remains important even as you age
Even if you use credit less in retirement, maintaining a strong credit score remains essential. Unexpected expenses—medical bills, home repairs, or family emergencies—can arise anytime. Without good credit, financing options may be limited or more expensive.
Credit access also provides convenience and security. A credit card allows for safe, cash-free transactions, fraud protection, and easy online purchases. It can also help cover large expenses, such as a new vehicle or home modifications while preserving savings.
Many older adults may relocate, whether downsizing, moving closer to family, or entering assisted living. A mortgage, lease, or even a care facility application may require a credit check. Keeping a solid credit profile ensures you have options when you need them most.
Credit scores as an early warning sign of cognitive decline
Beyond maintaining access to credit, tracking your credit score may offer an unexpected benefit: detecting early signs of cognitive decline.
Researchers from the Federal Reserve Bank of New York and Georgetown University analyzed data from 2.5 million older adults over 17 years. Among them, about half a million were eventually diagnosed with Alzheimer’s disease or a related form of dementia. The study found that financial warning signs often appeared years before diagnosis.
Missed credit card payments were common as early as five years before diagnosis, while missed mortgage payments became more frequent about three years prior. In the year leading up to diagnosis, individuals later found to have dementia were 34% more likely to miss credit card payments and 17% more likely to miss mortgage payments than before.
Since declining credit scores often precede cognitive impairment, monitoring financial habits can serve as an early indicator of potential issues. Catching these signs early allows individuals and their families to seek medical care and put financial safeguards in place before problems escalate.
Tips for maintaining good credit in later years
Taking proactive steps can help you or a loved one stay on top of credit performance in retirement.
- Use automated payments for recurring bills. This reduces the risk of missed payments, which can hurt your credit score. Automated payments work best for fixed expenses like mortgages, utilities, and insurance premiums.
- Avoid carrying credit card balances. Using a credit card for convenience is fine, but regularly carrying a balance can lead to unnecessary interest charges and signal financial strain. Paying off your balance in full each month keeps your finances in check.
- Monitor your budget and adjust as needed. Retirement finances require careful planning, but unexpected expenses can arise. Regularly reviewing your budget ensures you stay on track and make adjustments as needed.
- Review payments with a trusted relative. While financial privacy is important, allowing a trusted family member to help track bills can prevent missed payments and catch potential fraud early. Limited access to statements—not full account control—can provide peace of mind.
- Check your credit score regularly. Signing up for credit monitoring or reviewing your credit score can help detect sudden changes. A sharp drop may indicate fraud, financial mismanagement, or, according to the study, cognitive decline.
Credit scores and dementia may seem unrelated, but research suggests otherwise. Monitoring your credit isn’t just about financial health—it could also provide early warning signs of cognitive decline. Whether for yourself or a loved one, staying on top of credit habits can help protect both financial security and overall well-being in the years ahead.
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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.
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