In 2025, America’s average credit scores have taken a noticeable dip, especially among Gen Z—the cohort aged 18 to 29. While the national average FICO score fell by two points to 715, Gen Z saw the steepest drop, with their scores declining by three points year-over-year. This shift reflects the unique financial strains faced by younger adults as they navigate early adulthood in a changing economic landscape.

Gen Z’s financial vulnerability is underscored not just by the overall downward trend, but also by the volatility in their individual scores. Fourteen percent of Gen Z experienced a significant decline of 50 points or more in their FICO scores over the last year, outpacing previous years and standing out among all other age groups. This larger-than-average swing highlights the uncertainty facing younger adults, who are often juggling entry-level wages, increased living costs, and loan repayments.

One of the main drivers of Gen Z’s credit struggles has been the resurgence of student loan payments. After pandemic-era pauses ended, many young adults found themselves responsible for regular student loan obligations once again. Data reveals that 34% of Gen Z carries student loan debt, compared to just 17% of the general population. The reactivation of these payments, alongside rising housing and living costs, has made financial stability harder to attain.

Another contributing factor behind falling scores is the growing dependence on credit cards. As wages struggle to keep pace with inflation, people—particularly those just starting out—rely more on revolving credit to manage everyday expenses. This year, the average credit card utilization rate climbed to 35.5%, a figure that signals increased use and, often, rising balances. Higher credit card utilization negatively impacts FICO scores, as it suggests a borrower is taking on more risk and could be overextended.

Strikingly, there has been a shift away from the “middle ground” of credit scores. The proportion of Americans with FICO scores between 600 and 749 fell to just under 34%, meaning more individuals are sliding toward either high or low extremes—a trend economists call a “K-shaped recovery.” In this scenario, some Americans are bouncing back and improving their finances, while others, notably younger people and those with recent debts, continue to lag or decline.

As financial challenges mount, many Americans are changing how they approach debt repayments. A growing number are prioritizing auto loan payments over mortgages, placing cars—often essential for work—at the top of their payment hierarchy. Mortgages are more likely to be paid than personal loans, while student loans have become the lowest priority, even among adults with relatively healthy credit. This reprioritization of debt underscores a strategic response to tough times: paying bills that keep key assets, such as a car, while letting less immediately impactful obligations, like student loans, take a backseat.

Despite these struggles, there is some evidence that people are becoming more proactive in managing their credit health. Over half of Americans checked their credit scores at least once in the past year—an increase from previous years—indicating greater awareness and a desire to stay on top of potential financial risks.

For financial bloggers and advisors, these trends underscore the importance of education around credit management. Young adults should be encouraged to:

• Track their credit reports regularly.
• Limit credit card usage where possible.
• Consider repayment strategies that prioritize maintaining essential assets.
• Seek advice early to avert major credit swings.

In a year marked by economic uncertainty, staying informed and proactive can make a significant difference to one’s financial wellbeing. Gen Z, in particular, will need to adapt quickly and strategically to build a solid foundation for the future. As credit scores and financial priorities shift, the key will be flexibility, education, and persistence.