Key takeaways

  • Bad credit can be a source of stress, leading to mental and physical health issues.
  • Irrespective of income, those who feel less confident about managing their debt are more likely to be impacted by debt-related health issues.
  • Budgeting, turning to lower-interest card offers (such as balance transfer cards) and even seeking advice from a nonprofit credit counseling firm can potentially help you better manage debt.

How bad credit affects mental health                                    

When your financial health is in poor shape — with one of the main symptoms being bad credit — your mental and physical health can suffer, too.

“CPAs and doctors have one thing in common,” says Howard Dvorkin, CPA and chairman of “We see the same symptoms in people. Headaches, ulcers, high blood pressure, chest pain, obesity, anxiety, depression, panic attacks. You name it, I’ve seen it.”

Dvorkin calls stress the “supervillain” of mental and physical health, and describes money problems as the “superfood” of stress.

“Nothing stresses you out faster than being in debt,” he says. “It spins off stress in a million different directions.”

Here are two examples of those directions:

  • A study published in 2014 linked low credit scores to a higher risk of cardiovascular disease.
  • Research suggests a strong connection between health issues (such as high blood pressure and psychiatric disorders) and financial difficulties (including debt and bankruptcy).

“The trickiest part about these studies is that it’s really hard to make a causal link between credit and health, because it’s not clear if health is bad because of the poor credit or if the credit becomes bad because of poor health,” says Lorraine Dean, an associate professor of epidemiology at Johns Hopkins University’s Bloomberg School of Public Health, who has studied the connection between socioeconomic factors and health.

Regardless of what causes the issues, you can take matters into your own hands when you want to steer away from debt and poor health and toward financial, physical and mental well-being.

How can bad credit affect your physical health?

Simply put, bad credit can negatively impact your physical health, triggering everything from headaches to heart attacks.

“Stressful experiences or circumstances… like debt can ‘get under the skin’ by activating a complex hormonal response that damages health over time,” says Joseph “J.D.” Wolfe, an associate professor of sociology at the University of Alabama at Birmingham who has studied the ties between health and debt.

For instance, research published in 2021 by Wolfe and two of his colleagues found an association between debt and obesity among U.S. adults, particularly Black women. The study pinpointed a “generally robust” but complex relationship between wealth and obesity, depending on gender, race and type of wealth.

Another study draws a parallel between debt and pain.

A study released in 2021 by Adrianne Frech, a medical sociologist and associate professor at the University of Missouri School of Health Professions, examined the financial health of almost 8,000 baby boomers from age 28 to 40 and their physical health at age 50. A little over three-fourths of the people who were saddled with consistently high debt felt more physical pain compared with people who had no unsecured debt (such as credit cards), Frech’s analysis found.

How can bad credit affect your mental health?

Research suggests that people grappling with bad credit (in the form of too much debt) can experience increased stress, anxiety, depression and suicidal thoughts.

For example, survey data from the United Kingdom’s Money and Mental Health Policy Institute shows 46 percent of people with bad debt also experienced mental health problems, and 86 percent who dealt with mental health problems thought their debt struggles further harmed their mental health.

Another U.K. study published in 2022 aligns with that data. Nearly one-fourth of the adults surveyed for the study reported difficulty managing their debt, and those people had higher rates of anxiety, depression and mental health treatment.

“The psychological problems associated with being in debt are not limited to those people with low incomes,” the study’s authors wrote. “Irrespective of your income, your beliefs about your ability to manage your debt [are] what is important; perceived problems with managing debt levels [are] associated with depression, anxiety and mental health help-seeking.”

How you can rehabilitate your credit

Aside from taking care of your physical and mental health, it’s important to take care of your financial health. Here are some of the ways you can rehabilitate your credit.

Seek help from a nonprofit credit counselor

A nonprofit credit counselor can help you establish a budget and create a plan to pay off your debt. That can go a long way toward reducing or eliminating any health issues you’re facing.

“When your mental health suffers, you speak to a therapist,” says Dvorkin. “When your physical health suffers, you see a doctor. So, it makes sense that when your financial health suffers, you see a professional.”

Create a budget

If you don’t get assistance from a nonprofit credit counselor, you still should set up a budget. This helps you track your income and expenses and can help you move from bad credit to good credit. You can create the budget on paper, in a spreadsheet or with a budgeting app.

Look into a secured credit card

Dean recommends exploring a secured credit card if you’re trying to rehab your credit.

A secured credit card acts like a traditional, unsecured credit card, except that, with a secured card, you provide a refundable security deposit (such as $250) that serves as your credit limit. If you properly handle a secured card, this positive activity typically shows up on your credit reports and can help lift your credit score.

Be responsible with credit

If you’re making purchases with a credit card, identify where the money to pay the bills will come from, Dean recommends. For instance, you might set aside a certain amount of money in a bank account solely for covering credit card bills.

“Credit is about managing the debts you have,” Dean says. “You can have large debts, but as long as they are well-managed, you can still have good credit.

In addition, Dean suggests saving credit cards for essentials (think much-needed home repairs) rather than purchases like posh vacations or fancy electronics.

“At the same time, don’t be afraid of credit or completely avoid it,” she says. It’s important to cultivate credit, and it takes time.

Check your credit

Regularly check your credit report and credit score so you can monitor your progress in the quest to dig out of bad debt. Be sure to check for errors on your credit report that might be harming your credit score, such as payments that were incorrectly reported as being paid late.

Consider a balance transfer credit card

You might try applying for a balance transfer credit card as part of your effort to bounce back from bad credit. A balance transfer card lets you move debt from a higher-interest card to a lower-interest or 0 percent APR card. This can lead to big savings on interest.

Keep in mind, though, that it might be hard to qualify for a balance transfer card if you have bad credit. Also, don’t forget that your credit score will temporarily decrease when you apply for new credit. 

The bottom line

Aside from maintaining good physical and mental health, it’s important to keep your financial health in shape. If you’re looking to wipe out your debt and rehabilitate your credit, consider the tips above, and keep in mind that every step toward financial health is a step in the right direction.