Credit scores are down, delinquencies are up and Gen Z is suffering the most from the credit crunch.
These are some of the main takeaways from the recently released FICO Score Credit Insights report, which showed the average American credit score took a 2-point nosedive in 2025 — the biggest downward trend in more than 15 years [1].
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The report put the average American FICO credit score at 715, down from 717 in 2024. The average credit score hasn’t fallen 2 points since April 2009, in the midst of the Great Recession, when it dropped from 689 to 687.
Gen Zers, meanwhile, endured an average 3-point credit score drop — the biggest of any generational cohort — largely brought on by student loan delinquency, which began appearing again on credit reports in February after five years of pandemic-era relief.
By comparison, FICO and other major credit report agencies say a range between 670 and 739 constitutes a “good” credit score.
What caused credit scores to tumble?
A related analysis of the FICO report blamed rising debt levels and missed borrower payments — along with overall economic uncertainty, rising consumer prices and higher interest rates — for putting the 2-point dent in the average credit score [2].
In addition, economist Amy Crews Cutts noted in the FICO report that delinquency rates for personal loans, car loans and credit cards “are more consistent with an economy in recession than one still in expansion.”
Bankcard delinquency rates, for example, hit 11.7% this year, only 2% shy of the Great Recession peak. Meanwhile, credit card utilization, which measures the revolving credit you owe vs. the overall credit limit, hit 35.5% in 2025 — or about 5.5% more than the topline percentage Equifax recommends [3] you use to avoid hurting your credit score.
Personal loan delinquency reached 6.1%, which the report notes is higher than 2019 numbers (5.6%) and just slightly lower than the Great Recession (7%), and mortgage and home equity loan delinquency numbers remain low but are rising. Car loan delinquency stabilized year over year but is still up 24% since 2021.
The big hit, however, came from student loan delinquency, which disproportionately affects Gen Z. FICO showed the student loan delinquency rate reaching a record high of 3.1% this year, with Gen Z carrying 34% of the open student loans. Overall the cohort posted an average credit score of 676 — nearly 40 points lower than the national tally.
Of course, with Gen Z having less time to build credit or benefit from investments — not to mention attempting to navigate high unemployment in an historically dismal job market — any significant financial activity can cause wild credit score swings. In fact, the report shows that 9.8% of Gen Zers boasted a credit score increase of more than 50 points since 2024, while 14.1% of the same cohort saw a 50-point credit score drop during the same period.
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Gen Z is ready to rebound from bad credit scores
In contrast to the falling average credit score, a five-year high of 24.8% of American consumers found themselves in the top score range: 800 to 850. It’s a result of what FICO senior director Tommy Lee, in an interview with CNN, called “a K-shaped economy,” explaining that “those with wealth tied to stock market portfolios and rising home values are doing well and others are struggling with high rates and affordability problems” [4].
Yet, despite their struggles, Gen Z is leading the way when it comes to credit score rehab. The report noted that the younger generation of consumers “have the most potential for score improvement through sound credit behaviors, such as paying their bills on time, keeping their credit card balances low, and only applying for new credit as needed.”
That aligns with findings from earlier this year, when Forbes reported that Gen Zers are combating such economically precarious times by integrating “financial habits into their daily lives — much like they do with mental and physical well-being” [5].
Beyond Gen Z, FICO called credit score monitoring “the nation’s new financial fitness tracker,” declaring that a whopping 90% of American consumers made an effort to improve their financial health in the last year.
How to improve your credit score
Your debt repayment history, the overall length of your credit history, the types of credit accounts you hold and any unpaid balances all contribute to your credit score. It does take time to build a solid credit score but, if you’re looking for ways to start, there are some things you can do now.
The most common piece of advice is to pay debts and loans on time, including the full balance on credit cards if possible. Experian, one of the nation’s biggest credit reporting agencies, calls debt payment history “the most important credit scoring factor” when it comes to your FICO score [6]. The Consumer Financial Protection Bureau adds that it’s best to keep credit card balances to less than 30% of your available credit. And, automatic withdrawals are helpful to ensure that you don’t miss payments.
When it comes to your credit accounts, Equifax says to avoid opening new ones you don’t need while maintaining old ones you still have [7]. Even if you don’t use the old ones, they bolster your credit history by virtue of the length of time you’ve kept them active.
Many experts also suggest that maintaining a successful credit mix — a combination of anything from credit cards to a car or student loan to a mortgage — can help improve your credit score by showing a good history of repayment.
They also advise disputing any possible errors on your credit history to ensure you aren’t punished for mistakes like accounting errors or even identity theft.
For Gen Zers, or anyone looking to improve lagging credit scores, TD Bank advises that options ranging from secured credit cards to cosigning a family member’s account to credit builder loans can all help kickstart positive credit activity with safety nets built in to mitigate risks [8].
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[1]. FICO. “Score credit insights”
[2]. FICO. “Average U.S. FICO Score stays at 717 even as consumers are faced with economic uncertainty”
[3]. Equifax. “What is a credit utilization ratio?”
[4]. CNN. “Credit scores drop at fastest pace since the Great Recession”
[5]. Forbes. “The new money mindset: Gen Z is treating finances like self-care
[6]. Experian. “How to improve your credit score”
[7]. Equifax. “How to improve your credit score”
[8]. TD Bank. “How to build your credit score”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.