Can poor creditworthiness and excessive debt lead to your death? It certainly can if you owe money to the mob. However, it does not require a visit from Vito the Enforcer for credit concerns to affect your health.
A paper recently published by the Federal Reserve Bank of Atlanta shows a connection between financial difficulties and an increased risk of death. By comparing credit histories with mortality outcomes over a four-year period of data from the Federal Reserve's Consumer Credit Panel, researchers found that delinquent debt and poor credit correlates to higher risk of death. Conversely, an increase of 100 points in an individual's credit score decreases mortality risk by 4 percentage points.
Multiple studies have shown connections between financial stress and poor health, and it makes sense that the connection could extend to an increased risk of death. Financial insecurity may produce other aggravating factors, such as reduced access to proper health care, poorer diet, and even substance abuse.
The study takes the broader view in conclusion, asserting, "Taken as a whole, our results imply that financial policies are health policies: the effect of individual finances on mortality is non-trivial." Public policy may well help, but if you are under enough financial stress that your health is beginning to suffer, you do not have time to wait on government assistance.
How can you improve both your finances and your health? Start with an honest assessment and a desire to change the situation. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. If excessive debt is the primary reason for your poor creditworthiness, it's time to reassess your budget (and if you don't already have one, it's time to make one). Whether your debt comes from chronic overspending or a large debt such as student loans, a budget is the place to begin your journey to health, both physical and financial.
With your budget characterized, you must find ways to reduce expenses and increase income to gather surplus funds to pay down debt. For larger debts, try talking to your lender to see if you can negotiate a payment plan. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.
You may be able to consolidate debt by taking advantage of a balance transfer card. Balance transfer cards often have introductory interest-free periods (typically 12-18 months) that allow you to devote extra funds to paying off debt instead of accumulating interest. Debt Optimizer by MoneyTips can help you to consolidate your debt for free. Once your debt is consolidated, it will be easier to keep track of it and you will be less likely to miss payments.
With a combination of card shopping and luck, you may be able to take the advice of April Lewis-Parks, Director of Education and Public Relations at Consolidated Credit, and switch to a balance transfer card with a higher collective credit limit. This should immediately increase your credit score by dropping your credit utilization, the ratio of the credit you are using to your total available credit. A lower value suggests lower risk to lenders. Explains Lewis-Parks, "So, if we have a credit card that has a $5000 limit to it, and the consumer has $4000 on it, that's a really high utilization ratio of 80%. That is no bueno. We want it to be more like 30%. So, if they take that debt and they transfer it to another card that has a higher credit limit, say a $10,000 credit limit, so then that $4000 is much lower percentage-wise and that alone will raise their credit score."
Professional financial help may be in order if you can't seem to get a handle on your finances. Millennial Money Expert Stefanie O'Connell suggests looking at a credit counselor as "a personal trainer for your finances," adding, "The benefit of working with a credit counselor is that that person can help you be proactive in the process of consolidating your debt or negotiating with your lender."
Don't be afraid to seek help on credit counseling, even if your health has not been affected to date. Be proactive and you can learn how to apply sound financial habits before debt collectors – or Vito – pay you a visit.
If you want to settle outstanding debts for less than what you owe, try our debt settlement tool.