Average FICO Score Dips, but a Closer Look Reveals a K-Shaped Economy
Missed student loan payments continue to hurt American students’ credit scores, but the pain is more evenly distributed, according to credit score company FICO.
The national FICO score, or the three-digit number used to summarize your credit report, dropped to 714 as of April 2025 and two points as of October 2024, the company said in its latest FICO Score Credit Insights report. The decline was mainly due to reporting student loan delinquencies and a slight increase in mortgage debt, FICO said. Rejection of FICO scores can be caused because lenders use them to decide whether to approve loans and credit cards, and determine interest rates and credit limits.
At the same time, a record 48.1% of consumers now have FICO scores of 750 or higher, indicating a “K-shaped economy.” A K-shaped recovery means economic development is uneven, with some people rising to the top while others continue to fall back or struggle.
“The result is a credit market that’s more challenging for some and more rewarding for others—a dynamic that requires more lender-friendly strategies,” said Ethan Dornhelm, head of analytics at FICO.
FICO scores range from 300 to 850, with higher scores indicating lower risk to lenders and lower scores suggesting greater risk.
Who Feels Stress?
The share of Gen Z, defined in the FICO report as people aged 18-29 years old, dropped at least 50 points in their FICO score, jumping to 14.4% from 11.3% between October 2024 and October 2025. That compares to an increase of up to 10.1% from 8.8% of the FICO of the general population.
“This may be due to ongoing problems with student loan repayments,” the report said.
How Are Gen Z and Others Coping?
Gen Z has been opening credit cards.
“Market projections suggest that Gen Z has abandoned traditional credit cards in favor of alternative lending products,” particularly buy now and pay later, FICO said. “The data tells a different story: A higher percentage of Gen Zers are opening new bank cards than any other age group, actually making them the most active group in getting a traditional credit card.”
But more credit cards don’t mean they’re reckless spenders. Instead, “the findings point to a shift in the way consumers relate to credit—it’s no longer passive, it’s intentional,” said Jenelle Dito, vice president of consumer empowerment programs and partnerships at FICO. “People are monitoring their credit and their strategic thinking.”
More than a third of Americans (77%) consider interest when applying for a credit card, and 29% say they won’t apply unless rates drop to a certain point, FICO said.
Overall, 83% of Americans said maintaining or improving their credit score is their top priority this year, FICO said. However, inflation and affordability challenges have forced nearly one in four people to make less than their minimum payment or skip a credit card or loan payment in the past 12 months.
About 111 million Americans, or more than 40% of adults and half of credit card holders, can’t pay their balances and carry more than $1 million in credit card debt each month, according to an analysis by Protect Borrowers and The Century Foundation.
Will Student Loans Continue to Suppress FICO Scores?
Student loan delinquencies put a lot of pressure on the FICO score as payments and reporting resume at the end of 2024, but that has now stabilized, FICO said.
About one-third, or 7.1 million, of student loan borrowers who had outstanding payments saw a new delinquency reported on their credit file, FICO said. That lowered their credit scores, on average, down 62 points as of January 2025.
“After a significant increase in student loan delinquencies in April due to re-reporting of delinquencies, there was only a 0.1% increase in student loan delinquencies between April and October 2025,” she said.
What Should Creditors Look For?
Mortgage delinquencies have been reaching pre-pandemic levels, FICO said. Delinquency rates are almost double October 2021 rates but have taken longer to reach pre-COVID levels, hampered by rising house prices.
Home equity allows Americans to use home equity and refinance opportunities to avoid delinquency, FICO said. Now, many markets across the US are seeing home prices fall from their 2022 highs, according to the Federal Housing Finance Agency.
“As crime continues to rise towards pre-pandemic levels, the sector needs continued vigilance at this time of continued market volatility,” said the lender.
FICO analysts also warn that as Americans aim to maintain or improve their credit scores, the education gap remains a barrier to success.
“Basic knowledge gaps remain about the behavior of borrowers that qualify them for better (lending) terms,” FICO said.
For example, two out of three Americans either incorrectly believe that income directly affects credit scores or admit that they are not sure that it does. That “is a misconception that can prevent consumers from realizing that credit improvement can be achieved through behavioral change rather than higher payments,” FICO said.
Medora Lee is a money, markets, and personal finance reporter for USA TODAY. You can find him at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
This article first appeared in USA TODAY: Average FICO score dips, but a closer look reveals a K-shaped economy
Reported by Medora Lee, USA TODAY / USA TODAY
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