Managing your cash flow correctly is not within everyone’s reach. But those who fail to do so are not necessarily devoid of skills. They could simply be suffering from an incurable disease. Indeed, a study shared by the New York Times, conducted by researchers from Georgetown University and the Federal Reserve Bank of New York, highlighted a troubling phenomenon: during the five years preceding an Alzheimer’s diagnosis , the credit scores of many sick individuals, whose data was scrutinized, have steadily declined while their likelihood of default has increased.
According to researchers, this financial deterioration is a direct consequence of the cognitive disorders that characterize the disease, even in its early stages. “The results are striking in their clarity and consistency. The financial decline we observe reflects the cognitive decline these individuals experience: credit scores steadily decline, quarter after quarter as diagnosis approaches.”said Carole Roan Gresenz, lead author of the study.
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The importance of early detection
Specifically, early-stage dementia can cause memory loss, causing people to forget to pay their bills. It can also impair financial decision-making, leading to risky borrowing or vulnerability to financial exploitation. Actions which can have serious consequences such as property foreclosures in the worst case.
Faced with this observation, the authors of the study recalled the importance of early detection of dementia, a difficult prospect given the progressive onset of the disease. So they believe credit report data could be a valuable tool. Algorithms could potentially flag unusual trends (increasing delinquencies, irregular borrowing, etc.) as warning signs, triggering a medical evaluation.
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According to data reported by the World Health Organization, more than 55 million people currently have dementia worldwide. Alzheimer’s disease is the most common cause of dementia and is believed to cause 60 to 70% of cases.
