U.S. consumer credit quality is showing its sharpest deterioration since the global financial crisis, and members of Generation Z are at the center of the slide. A new report from Fair Isaac Corp., the Montana-based creator of the widely used FICO credit score, shows that young borrowers experienced the biggest hit of any age group this year, helping push down the national average score.
According to the report, the average FICO score slipped to 715 in April from 717 a year earlier — the second consecutive year-over-year decline. The last comparable drop occurred during the depths of the 2009 financial crisis, when the average fell three points to 687.
Gen Z borrowers, defined broadly as people born between the mid-to-late 1990s and early 2010s, recorded the steepest decline not only of the past year but of any age cohort since 2020. Their average score fell three points to 676, underscoring how younger Americans are bearing the brunt of tighter credit conditions and rising debt burdens.
FICO scores, which typically range from 300 to 850, are a key measure of consumer credit risk and are routinely used by banks and lenders to determine whether applicants qualify for loans, mortgages or credit cards — and at what rates.
Fair Isaac attributed the overall decline in scores to higher credit utilization and mounting delinquencies. The resumption of reporting on student loan delinquencies was a particularly significant driver, with the percentage of the scorable population in delinquency on those loans hitting a record high of 3.1%.
Gen Z stands out in this regard: roughly 34% of the cohort is still repaying student loans, compared with just 17% of the total population. Fourteen percent of Gen Zers saw their credit score plunge by 50 points or more — a markedly higher proportion than the 10% share across all U.S. borrowers.
While the average FICO score moved lower, the median score ticked slightly higher to 745 from 744 a year ago. That divergence suggests a concentration of severe score declines among more vulnerable borrowers at the lower end of the credit spectrum, rather than a broad-based deterioration.
The report also highlights rising credit card utilization — the share of available credit being used by consumers — within the “Amounts Owed” component of the FICO score. Utilization climbed to 35.5% in April, up from a low of 29.6% in April 2021, when pandemic stimulus and restricted spending on travel and entertainment boosted household savings.
With the savings buffer from the pandemic now eroding and borrowing costs remaining elevated, younger Americans in particular are feeling the strain. As a result, lenders and policymakers are likely to scrutinize Gen Z’s credit behavior closely as a bellwether for broader consumer stress in the coming months.
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