America’s credit scores have fallen, but the first generation faces the harshest financial reality – why does it matter?

Credit scores can be crucial to renting an apartment, getting a favorable rate on a bank loan, or signing up for a cell phone plan. Now, getting that ticket may be harder.

Data shows in America Credit scores They are declining rapidly, and the younger generation of borrowers is bearing the brunt.

Data analytics firm FICO’s inaugural credit insights report, released Sept. 16, shows the national average FICO score remains at 715 — a two-point drop from 2024, which was first reported in April, and Bigger score drop Since the Great Recession. (1)

Furthermore, Gen Z borrowers (ages 18-29) saw the largest year-over-year decline of any age group – three points – along with the lowest average score of 676. (2)

The statistics have risky implications: A low credit score can lead to thousands of extra dollars in interest payments, fewer housing options or being turned down outright when you need credit most. For Generation Z, burdened by student loans, fragile job opportunities and high costs of living, the numbers point to a harsh financial reality that could define adulthood.

FICO attributes the decline in the national average score to rises in credit card usage and missed payments, which may be due in part to the resumption of… Student loan Deviation reporting. FICO reports that 34% of Gen Z consumers have student loan balances, compared to 17% of the overall population.

In addition to having the lowest scores, Generation Z showed above-average credit score volatility. From 2024 to 2025, 9.8% of younger consumers saw their scores rise by more than 50 points, compared to 7.8% of the overall population. On the flip side, 14.1% of Gen Z scores dropped by more than 50 points, compared to 10.1% of the overall population.

Read more: 30% of American drivers have changed car insurance in the past five years. Here’s how much they saved — and how you can cut your bills ASAP

The report also highlighted the knowledge gap. For example, when asked about their credit scores, 17% of Gen Z members reported that they didn’t know how to find their score, compared to just 8% of baby boomers. Also, 21% of Gen Z felt they lacked the tools and knowledge to improve their results. Without such insights into their credit health, many individuals would make mistakes that could ultimately cost them.

So, why does all this matter? A low credit score affects almost every aspect of your financial life. Renters with poor credit scores may be required to pay higher deposits or be denied a home outright. Car loans may come with very high interest rates. Qualifying for a mortgage can become more difficult.

In short, when your grades are low, some things in life may cost more. For an already cash-strapped generation, this is a devastating trap to fall into.

The good news is that credit scores are not set in stone. With consistent effort, anyone can make their way back. Some proven strategies include:

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

Keep credit utilization lowSome experts recommend using less than 30% of your available credit limit.

Do not close old accounts: A longer credit history, especially if it’s positive, can help you improve your score, even if you rarely use the card.

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

Check 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. They are provided without warranty of any kind.