"Falling credit scores are just the latest sign that all is not well within the U.S. economy. According to a new report from the Fair Isaac Corp. (FICO), creator of the gold standard credit score used by most lenders, the average FICO score dropped to 715 between 2024 and 2025-a two-point decrease and the biggest drop since 2009."
""The recent K-shaped economy has led to financial stress for some borrowers impacted by affordability concerns stemming from inflation and higher interest rates, while others have benefited from increases in their stock market portfolios and home price appreciation," the FICO report states."
"U.S. borrowers continue to grapple with high interest rates, a side effect of the Federal Reserve's efforts to rein in the soaring post-pandemic inflation that's driving high prices. In spite of those efforts-and with rate cuts imminent- President Trump's tariffs are pushing inflation up yet again, making the cost of gas, groceries, clothes, and other essentials even less affordable. Members of Gen Z, relatively early in their credit journeys, saw the biggest credit score decrease, dropping three points in 2025. The decrease is the most notable among any age group in this year's report, but also the largest drop for any age group since 2020."
The average FICO score declined to 715 between 2024 and 2025, a two-point drop and the largest single-year decrease since 2009. The distribution of scores shifted away from the middle, with the share of scores between 600 and 749 falling from 38% in 2021 to 33.8% in 2025. High interest rates and persistent inflation have strained borrower affordability, while economic gains in markets and housing have benefited others, deepening wealth disparities. Younger borrowers were hit hardest, with Gen Z seeing a three-point decline, linked in part to resumed student loan delinquency reporting.
Read at Fast Company
Unable to calculate read time
Collection
[
|
...
]