Credit score decline can be an early warning for dementia, study finds

Credit scores — used to gauge a person's ability to fulfill their financial commitments — can also be an early warning sign of cognitive decline, according to research from the New York Federal Reserve and Georgetown University. 

A person's credit score, on average, starts to weaken in the five years ahead of a dementia diagnosis, while mortgage delinquencies start increasing three years prior, researchers found in an analysis of a nationally representative sample of credit reports and Medicare data on more than 2.4 million people spanning 2000-2017.

While not everyone in the early stage of Alzheimer's disease and related disorders (ADRD) will fall behind on bills, for those that do, the scale of the change in delinquency is substantial. One year before diagnosis, average credit card balances in delinquency increase by more than 50% and average mortgage balances in delinquency are 11% higher, the researchers found. 

Roughly 600,000 delinquencies on some debt will occur over the next 10 years as a consequence of yet-to-be diagnosed ADRD, they estimate. 

"Our findings substantiate the possible utility of credit reporting data for facilitating early identification of those at risk for memory disorders," the researchers state in the latest findings, which echo a 2020 study that found Medicare beneficiaries who go on to be clinically diagnosed with dementia are more likely to miss payments on bills as early as six years before diagnosis.

A progressive brain disorder that diminishes memory and cognitive skills over time, dementia affects roughly 15% of U.S. adults over 70. According to the Centers for Disease Control and Prevention, about 5.8 million people in the U.S. have Alzheimer's disease and related dementias, including 5.6 million 65 and older.

The researchers hope to build an algorithm that will help predict who is likely to develop Alzheimer's in the future, a tool that could be used by doctors in determining whether to recommend further screening. A predictive algorithm could prove to be a low-cost, easily scalable alternative to mass magnetic resonance imaging (MRI), for instance. 

"It is important for family and friends to realize this happens before diagnosis, to look more holistically at finances and payment decisions that older adults might be making," Wilbert van der Klaauw, economic research adviser on household and public policy research at the New York Fed, told CBS MoneyWatch. Family members should be on the lookout for situations such as "Does this person suddenly have new credit cards?" the economist advised.

Safeguarding finances

"These types of financial difficulties can happen long before there is a diagnosis," Carole Roan Gresenz, a professor in Georgetown University's McCourt School of Public Policy and the School of Health, said. People should think about starting conversations to "prevent some of these financial difficulties before they happen," she added. 

Those difficulties can include being susceptible to financial abuse, fraud or scams including identity theft or get-rich-quick schemes, according to Monica Moreno, senior director, care and support, at the Alzheimer's Association. "Failure to address these problems or potential threats can put individuals living with dementia at great financial risk," she stated.

The latest report "offers further evidence that challenges managing money or personal finances are common early warning signs of dementia," Moreno said. "It is important for family members to identify those potential signs early and intervene as soon as possible," she added.  

And, even though treatment options are limited for Alzheimer's and other memory-related disorders, early diagnosis can mean quicker financial planning and other changes to better safeguard those afflicted and their families. 

"It can be challenging to tell how a close family member or friend is managing their personal finances because it's often done independently, in private," according to Moreno. "It can be even more challenging if you are not living with the person or only see the person occasionally because you may not see other disease-related warning signs that could indicate a problem." 

Still, in the early stages of Alzheimer's disease, people are more likely to understand the importance of the issues and suspicious activities to avoid. "If you wait, these concepts will be more difficult to comprehend as your relatives' memories and other executive functioning skills decline," Moreno said. 

How to discuss with loves ones

If a loved one is having difficulties managing their finances, the Alzheimer's Association offers the following suggestions: 

• Discuss with the person how a trusted family member or friend can help with either paying bills or setting up automatic billing to avoid late payments.
• Create a separate account where you can keep a small, agreed-upon amount of money that the person can use for recreational activities, meals with friends, etc.
• Sign up to receive automatic notifications for withdrawals from bank accounts or large charges to credit cards. If you set a charge or spending limit and if the person spends more than that, the bank or credit company will let you know.
• Request electronic bank and credit card statements and watch for unusual purchases or changes in how the person typically spends money.
• Sign up for the "Do Not Call" list at donotcall.gov to protect against telemarketing calls and potential phone scams.

Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance.