Mental Health has a detrimental impact on people living with debt in their lives. We all know the financial problems that exist when in debt but not many people discuss the darker side that impacts so many of us.
How Does Credit Card Debt Affect Mental Health?
According to an analysis of 63 Academic papers of unsecured debt and mental health, There is a strong relationship between suicide as well as alcohol and drug abuse. The bulk of the studies presented the fact that the higher the debt showed a correlation to increasing negative effects on mental health. In order to analyze debt and how it impacts us we first need to try and solve the problem or see what comes first?
The Chicken or The Egg?
What comes first the mental problem or the debt burden? Well, simply put they actually both feed off of each other and each have their own impacts. Another analogy can be a sleeping problem such as insomnia. If one cannot sleep it starts to make you depressed but usually a happier person does not have trouble with insomnia. Doctors loosely will prescribe antidepressants for sleep and say your insomnia is caused by depression; When in reality the reason might be someone cannot sleep because of other factors in life such as stress. However, it is quite complex and difficult to understand.
- According to Thomas Richardson a Clinical Psychologist of University Southampton, “This research shows a strong relationship between debt and mental health; however it is hard to say which causes which at this stage,”
- “It might be that debt leads to worse mental health due to the stress it causes. It may also be that those with mental health problems are more prone to debt because of other factors, such as erratic employment.”
On the Road to Credit Repair
There is really no magic to fixing accurate information on a credit report that is plagued by problems such as missed or late payments.This information can stay on a report up to 10 years. However, depending on how long it takes to repair your credit; you can still work on fixing inaccurate information and file a dispute on errors that might be harming your credit.
First step in any credit repair process is always starting a baseline and obtaining your credit report. This might be a depressing step but you need to understand what has gone wrong and why. You can obtain your credit report from Transunion, Experian, and Equifax and it is worth noting that under the Fair Credit Reporting Act you are able to get one free report a year from each of these bureaus.
Credit to Debt Ratio
This is a big factor in credit scores and is basically all of your debt divided by your available credit. This debt to credit ratio is called the credit utilization rate and if one has a high rate it can definitely affect your scores. One obvious way to get this under control is to pay off your balances. Another temporary way is to try and increase your credit limit on your accounts or maybe even open a new account.
On Time Payments
This is kind of an obvious factor but it is detrimental to anyone’s credit. The longer you miss or are not on time with your payments it keeps dinging your credit. The sooner this is taken care of the faster your credit will heal. The credit score takes into account the size and how recent the payment problem happened.
Every time a creditor checks your credit in order to lend you money this gets noted in your credit history. If there are a lot of inquiries at once or new accounts then this can negatively affect your score.
In the infographic below we have put together the steps you need to repair your credit and the right practices you must employ to achieve this endeavor.