FICO Just Revealed America's Falling Credit Score

The nation's credit scores have dropped for the second year in a row, as younger Americans are having trouble paying off student loans, and delinquencies on car loans, credit cards, and mortgages head upward, a report from FICO revealed. After analyzing consumer trends across the U.S., FICO gave the nation an average credit score of 715, a drop of three points from 718 in 2023.

Gen Zers, who are now between 18 and 29 years of age, have seen their FICO credit scores fall by three points from 2024 to an average of 676. Credit scores range from 300 to 850 and anything lower than 670 can be considered a bad credit score.

The FICO report noted that since younger consumers have just entered the market, they're less likely to profit from a rising stock market and home price appreciation. They're also more likely to miss credit card payments and be hit by higher interest rates and inflation than other consumers, the report added. However, younger consumers' credit card scores are also falling because many are failing to pay off their student loan payments. The amnesty on missed student loan payments ended at the end of September 2024, and new delinquencies stemming from missed student loan payments can lead to a credit score drop of 171 points on average, per the Federal Reserve Bank of New York.

Since 34% of Generation Z still has open student loans, the resumption of loan collection explains why 14.1% of this age group had a 50-point decrease in their credit scores since 2024, per FICO's report. This decline is double the credit drop rate reported for Gen Zers in 2021. 

Yet younger peoples' credit scores are also falling because the economy itself is sputtering. "Millions of Americans are struggling mightily in the face of stubborn inflation, high interest rates, a difficult job market and overall economic uncertainty — and tough times often force tough decisions," LendingTree chief credit analyst Matt Schulz told CNBC.

This is yet another obstacle for Gen Zers as they struggle to find a good job that can pay off student loan. Among them is Dimitri Tsolakis, a recent international relations graduate of American University, who told CNN that after applying for hundreds of jobs, he had to take a job as a secretary with a lower income than expected. This led Tsolakis skip student loan payments to cover his car loans and other expenses. Tsolakis is not alone; FICO found that student loan payments ranked dead last in the payment hierarchy compared to car loans, mortgages, credit card payments, and personal loans in 2025.

FICO also reported that between 2021 and 2025, delinquency rates rose by 24% for car loans, 48% for bank cards, and 58% for mortgages. However, car payments were top priority, with consumers 19% more likely to make a car than a mortgage payment. Mortgages were the second highest priority for loan payments, FICO said. Car loans and mortgages were prioritized over other payments because they're tied to "tangible assets," according to FICO. However, car loans took priority because the payments are lower and cars can get repossessed quickly in the event of a default.

But not everyone's credit score is cratering. In April 2025, up to 23.4% of Americans had good scores of 750 to 799, while another 24.8% had scores that ranged between 800 and 850. This trend shows evidence of a K-shaped economy, according to FICO. Those with moderate scores initially (600 to 749 range) experienced declines of about 11% in the span of a year, falling victim to inflation and high interest rates. Meanwhile, others benefited from real estate and stock portfolio appreciation, seeing their credit scores increase. 

Bad credit increases consumers' costs by thousands of dollars thanks to additional fees and higher interest rates, Schulz of LendingTree told CNBC. Yet people can strengthen their credit score if they use credit sparingly and pay their monthly credit card balance entirely instead of only making minimum payments.