Credit Scores Tumble For The Second Year In A Row, As Americans Struggle To Stay Afloat

Core Insights - The national average FICO score has decreased to 715, marking a two-point drop from 2024 and the second consecutive year of decline [1] - The decline in credit scores is attributed to economic factors stemming from the pandemic, including rising prices and higher interest rates [2][6] Consumer Behavior - To cope with the high cost of living and increased student loan payments, 24% of Americans have opened new credit cards and 13% have taken personal loans in the past year [3] - Credit has become essential for many consumers during this period of economic uncertainty [3] Delinquency Rates - Delinquency rates for auto loans, student loans, personal loans, and credit cards have risen, with student loan delinquency reaching an all-time high of 3.1%, affecting 6.1 million consumers [4] - The auto loan delinquency rate has increased by 24% since 2021 [4] - Delinquency rates are critical as they constitute 35% of the FICO score calculation, with consumers having at least one delinquency seeing an average score drop of 69 points [5] Economic Context - Current delinquency rates are comparable to levels seen during the Great Recession, indicating economic conditions more aligned with a recession than expansion [6] Demographic Impact - Gen Z has been particularly affected by credit score fluctuations, with an average score of 679, which is 39 points lower than other age groups [7]