Job Loss, Medical Bills Are Leading Causes of Credit Score Drops

Job Loss, Medical Bills Are Leading Causes of Credit Score Drops

May 22, 2019         Written By Lynn Oldshue

According to new research from Elevate’s Center for the New Middle Class, work-related struggles were the most common reason for credit score declines. Over half (55%) of the respondents said their credit scores dropped below 700 after a job loss or reduction in work hours.

Medical bills were also cited as a source of struggle. When participants were asked for personal stories about their credit score declines, 26% were medical related. A 2017 study from Elevate showed that 70% of non-prime credit score holders (below 700) could not cover $500 in emergency medical bills with their savings.

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The researchers found most non-prime participants had multiple factors that contributed to their credit score issues. Of the people who mentioned medical bills affecting their credit scores, 73% also experienced a loss of income. In total, non-prime consumers were 86% more likely to have a score drop because of multiple factors, as opposed to only one.

As a result of damaged credit, 24% had to tap into their savings to cover their bills, 13% had to file bankruptcy, and 11% got a divorce. Of the non-prime consumers, 43% said they used a credit card to cover their debt/expenses.

Despite the reasons for credit damage, 48% of participants said they had seen an increase in their credit score over the last 12 months. Nearly one quarter (23%) had seen no change at all, and 23% saw a further decrease in their scores.

The information contained within this article was accurate as of May 22, 2019. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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lynn-oldshue

About Lynn Oldshue

Lynn Oldshue has written personal finance stories for LowCards.com for twelve years. She majored in public relations at Mississippi State University.