Senior couple

Long before a medical diagnosis, deteriorating finances — as evidenced by declining credit scores or missed bill payments — can be a signal of forthcoming memory disorders, according to new research from the Federal Reserve Bank of New York.

In a new paper, researchers at the New York Fed examine the connection between Alzheimer’s disease and related disorders and poor financial decision-making.

Combining data on credit scores from Equifax with Medicare claims data, the researchers found that average credit scores weaken and delinquencies increase, particularly for credit card and mortgage payments, for people who are eventually diagnosed with memory disorders. The financial deterioration occurred years before the medical diagnosis.

“Our findings substantiate the possible utility of credit reporting data for facilitating early identification of those at risk for memory disorders,” the paper said.

On average, the research found that the decline in credit scores and rising incidence of missed payments turned up five years before an eventual medical diagnosis.

“These findings point to financial consequences of the disease in its earliest stages, when symptoms are typically mild and not widely apparent,” it said.

The research also showed that finances deteriorated steadily in the years leading up to diagnosis.

“Credit scores weaken and the probability of delinquency rises as individuals approach diagnosis,” it said.

This growing financial stress can lead to late fees and interest charges that compound the problem and reduce access to credit, “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 paper said.

“Our findings lend urgency to the need for further consideration of the roles federal agencies and financial institutions can play in reducing financial risk among older households with undiagnosed memory disorders,” it said.

For instance, algorithms could be developed that use financial data to identify adults who may be at higher risk of suffering memory disorders, allowing for earlier intervention.