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If You Deal With Depression, Safeguard Your Credit

April 30, 2018
Credit Score, Personal Finance
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If you’re depressed, paying bills may be the last thing on your mind.

Depression or anxiety can make it difficult to concentrate, remember details or make decisions. Fatigue from poor sleep can also make depressed people vulnerable to financial missteps.

Forgetting to pay a bill can have big consequences on your credit standing, and that can affect your ability to qualify for a credit card or an apartment. A single bill paid more than 30 days late can subtract up to 100 points from your credit score, and that can cost you money in the form of higher interest rates on loans, for example.

If the sadness and stress were brought on by money problems, having a game plan may be a step toward relief. If it is chronic depression, which requires treatment, certain safeguards can help minimize impact on your finances.

Which came first?

Money problems can be either a cause or a result of depression, and the cycle can perpetuate itself, says Megan Ford, past president of the Financial Therapy Association and a financial therapist at the University of Georgia.

People with serious debt are more likely to suffer from depression than those without such financial problems, according to a 2014 review of medical literature in the National Institutes of Health’s PubMed Central.

No matter which came first, your credit can be at risk.

Simple actions to preserve and restore your credit

What you do to keep depression from hurting your credit will depend on where you are now.

If you are looking to prevent depression from hurting your score:

  • Consider automating payments, or at least minimum payments, so that you pay your bills on time.
  • Keep a mood diary. Write down how you feel if you are making unplanned purchases to make yourself feel better.
  • Confide in someone you trust and arrange to get the support you need when you are tempted to do something that would make money problems worse.

If your score has already been damaged by failing to address your finances, you can use the ideas above and you may benefit from these additional steps:

  • Open all your bills or financial statements and figure out exactly how much you owe and to whom.
  • Pull credit reports and check your credit score; you can get a free one from NerdWallet.
  • Plan to make at least minimum payments on your accounts, and pay on time, every time.

Cope with your financial feelings (not failings)

When you first look at your credit score, “have some distress tolerance skills in place,” says Lisa Bahar, a marriage and family therapist in Newport Beach, California.

“These include paced breathing, muscle relaxation, sometimes splashing cold water on the face, or depending on the distress, taking a cold shower can shock the anxiety and help you refocus.”

She recommends similarly approaching your bills, remembering that you are in control, and you choose how to proceed, whether it’s borrowing money, cutting up a card or, in some situations, filing for bankruptcy.

Enlisting the services of a financial advisor may be useful, Bahar says. And as scary as it sounds, taking ownership of the problem will put you in a position of power, not helplessness.

To break the cycle, take care of yourself

Consider taking advantage of free and inexpensive ways to improve your outlook. They are not a substitute for treatment, but can be a part of it. Ford recommends:

  • Go outside and walk. This can help release endorphins, which help you feel happy. In addition, there is evidence that being in nature helps improve mood and stimulates creativity.
  • Try a yoga class. Yoga’s emphasis on the mind-body connection has been shown to help people better manage depression. Some “pay-what-you-can” classes are affordable for those without much extra cash. You can also learn from books, DVDs or online.
  • Learn to meditate, which can help reduce stress and anxiety. Free guided meditations are widely available online. You might also try a free app such as InsightTimer.
  • Find a support group. Depression can feel like you’re in a battle by yourself, and feelings of shame can lead to isolation, which can feed the problem. And people in your support group may be able to point you to other free or low-cost resources.


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