Gen Z’s Credit Scores Are Dropping

October 10, 2025

Gen Z's credit scores have experienced the largest year-over-year decline among all age groups, dropping three points to 676 compared to the national average decrease of two points to 715, according to a new FICO report. This decline is primarily attributed to the resumption of student loan delinquency reporting, with 34% of Gen Z consumers having open student loans versus 17% of the total population. Following the end of pandemic-related federal student loan payment pauses and grace periods, young consumers are struggling to make timely payments amid economic challenges including high inflation and a tough job market.

Who is affected

Gen Z consumers
Federal student loan borrowers
Approximately 5.3 million borrowers in default
Young consumers struggling with financial stability
Individuals with low credit scores seeking loans and financial services

What action is being taken

The Trump administration has restarted the collection process for outstanding student loans
The federal government is preparing to seize wages and tax refunds from borrowers with unpaid loans
Credit scoring companies like FICO are tracking and reporting on generational credit score trends
Companies like Experian, FICO, and Credit Karma are offering free credit score checks

Why it matters

Lower credit scores make it more difficult and expensive to obtain financial services including car loans, mortgages, credit cards, and auto insurance
34% of Gen Z has open student loans compared to 17% of the general population
The national average credit score dropped two points to 715
Gen Z's credit score dropped three points to 676, the largest year-over-year decrease of any age group
Student loan delinquencies affect long-term financial stability for young consumers

What's next

No explicit next steps stated in the article

Read full article from source: The San Diego Voice & Viewpoint