The decline reflects higher credit card utilization and a rise in missed payments
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FICOs inaugural Credit Insights report shows U.S. credit scores dipping as inflation and student loan payments weigh on consumers.
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Gen Z faces the steepest declines, with student loan debt driving higher financial volatility.
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Auto loans now rank above mortgages in repayment priority, underscoring a major shift in consumer payment behavior.
FICO, the analytics software firm behind the widely used FICO Score, has released its first-ever Credit Insights report, offering a detailed look at how consumer credit behavior is evolving amid inflation, resumed student loan payments, and shifting financial priorities.
With 90% of top U.S. lenders relying on FICO Scores, the findings provide a window into how millions of Americans are managing debt in a changing economy.
The national average FICO Score now stands at 715, a two-point dip from 2024. While modest, the decline reflects higher credit card utilization and a rise in missed payments, some tied to the resumption of student loan delinquency reporting.
Consumers are adapting whether by prioritizing essential payments like auto loans, navigating the return of student loan obligations, or actively monitoring their credit health, said Julie May, vice president and general manager of B2B Scores at FICO.
Younger borrowers hit hardest
The report highlights that Gen Z, ages 18 to 29, experienced the sharpest score decline, down three points year-over-year. Younger consumers also had more frequent large swings with scores fluctuating by 50 points or more reflecting greater financial instability. Student loan debt remains a central factor: 34% of Gen Z hold student loans, compared to just 17% of the overall population.
Nearly half of Gen Z respondents to a FICO/Harris Poll survey said they relied on credit cards or Buy Now, Pay Later loans in the past year after experiencing job or income loss.
The distribution of credit scores continues to fragment. Consumers in the middle score range (600749) have declined, dropping from 38.1% of the population in 2021 to 33.8% in 2025. More borrowers are clustering at either the high or low ends, a reflection of the uneven K-shaped recovery.
This data reflects a K-shaped economy, where consumers are experiencing different financial outcomes but also adapting in meaningful ways, said Tommy Lee, senior director of Predictive Scores and Analytics at FICO.
Car payments now top priority
The traditional payment hierarchy has shifted. Consumers are now 19% more likely to pay their auto loans than mortgages, placing vehicles at the top of repayment priorities. Mortgages still rank higher than personal loans and credit cards, while student loans now sit at the bottomeven for higher-scoring borrowers.
This reprioritization highlights how borrowers are strategically protecting essential assets like transportation, often critical for maintaining employment.
The report also tracked delinquency rates since 2021:
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Auto loans: up 24%, with affordability a challenge across all score groups.
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Credit cards: up 48%, as utilization climbed to 35.5%.
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Mortgages: up 58%, though still below pre-pandemic levels.
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Personal loans: declining, aided by tighter underwriting standards.
Despite financial pressures, Americans are increasingly proactive about tracking their credit health. The survey found:
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71% check their credit scores multiple times per year.
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Nearly half of Gen Z (46%) and Millennials (45%) monitor their scores monthly.
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24% of Americans opened a new credit card in the past year, and 13% opened a personal loan as a financial cushion.
Posted: 2025-09-16 13:16:09
