U.S. credit scores suffer largest 2-year drop since Great Recession
After more than a decade of steady improvement, the average American’s credit score fell for the second year in a row.
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 data also shows that compared with 2021, more Americans are falling into the low and high ends of the credit score range rather than the middle. In 2021, 38% of scores were between 600 and 749; in 2025, that percentage is 33.8%. The highest FICO score is 850.
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.
“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. That data reflects America’s wealth gap, wherein the rich get richer and the poor get poorer, hollowing out the middle class in the process.
America’s two very different realities
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.
Falling credit scores among young people are linked to resumed student loan delinquency reporting, which reappeared on credit reports in February for the first time since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in March 2020. While only 17% of the broader U.S. population is still paying down a student loan, that percentage is 34% for Gen Z. It’s no surprise then that 14% of Gen Zers had a 50-point score drop in the last year, with late student loan payments hitting their credit reports for the first time.
Earlier this year, the Education Department warned student loan borrowers behind on their payments that their wages would be garnished. “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said in April.
Younger people are less likely to hold investments in the stock market, leaving them out in the cold when it comes to recent market gains. Between higher prices on everyday goods and high interest rates, many Americans are stuck navigating a uniquely challenging economy, even as wealthy investors continue to reap market wins.
For people in the U.S distant from the stock market’s highs, the economy is starting to feel like America during a very different era—a malaise backed by the new data. “Delinquency rates on auto loans, credit cards, and personal loans are at or near their highest levels since 2009, during the Great Recession—and are more consistent with an economy in recession than one still in expansion,” the FICO report states.
