Americans’ credit scores have been tumbling, but 1 generation faces the harshest financial reality — why it matters

Credit scores can be crucial to renting an apartment, getting a decent rate on a bank loan or signing up for a mobile phone plan. Now, that ticket might be harder to come by.

Data shows America’s credit scores are falling fast, and the youngest generation of borrowers is bearing the brunt.

The inaugural credit insights report from data analytics firm FICO, released Sept. 16, shows the national average FICO score remains at 715 — a two-point drop from 2024, first reported in April, and the largest score drop since the Great Recession. (1)

On top of that, Gen Z borrowers (aged 18-29) saw the sharpest decline of any age group year-over-year — three points — along with the lowest average score of 676. (2)

The statistics carry risky implications: a low credit score can result in thousands of extra dollars in interest payments, fewer housing options or outright rejection when you need credit the most. For Gen Z, saddled with student loans, shaky job prospects and high living costs, the numbers suggest a harsh financial reality that could define their adulthood.

FICO attributes the decline in the national average score to spikes in both credit card usage and missed payments, which in part may be due to resumed student loan delinquency reporting. FICO notes that 34% of Gen Z consumers have student loan balances, compared to 17% of the overall population.

In addition to having the lowest score, Gen Z displayed above-average credit score volatility. From 2024 to 2025, 9.8% of younger consumers saw their scores go up 50-plus points, compared to 7.8% of the total population. On the flip side, 14.1% of Gen Z’s scores went down 50-plus points, compared to 10.1% of the population overall.

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The report also highlighted a knowledge gap. For instance, when asked about credit scores, 17% of Gen Z respondents reported not knowing how to find their scores, compared to just 8% of baby boomers. Also, 21% of Gen Z felt they lacked the tools and knowledge to improve their scores. Without such insights into their credit health, many individuals may be making mistakes that could ultimately cost them.

So, why does this all matter? A low credit score impacts nearly every aspect of financial life. Renters with poor credit scores may be required to pay higher deposits or be denied a home outright. Car loans might come with punishingly high interest rates. Mortgages can become harder to qualify for.

In short, when your score is low, some things in life could cost more. And for a generation already strapped, that’s a devastating trap to get caught in.

The good news is that credit scores aren’t set in stone. With consistent effort, anyone can climb their way back. A few proven strategies include:

Paying bills on time, every time: Payment history is among the biggest factors in determining your score.

Keeping credit utilization low: Some experts recommend using less than 30% of your available credit limit.

Don’t close old accounts: A longer credit history, especially if it’s a positive one, can help your score, even if you rarely use the card.

Mixing it up: A healthy mix of credit types (credit card, car loan, student loan) may signal to lenders you can handle different obligations.

Checking your report: Mistakes happen, so consider pulling your credit report to make sure there are no errors.

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FICO (1, 2)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.