According to FICO’s 2025 Credit Insights Report, the average Gen Z credit score has dropped to 676, nearly 40 points below the national average of 715. Fourteen percent of young borrowers saw their scores fall by 50 points or more in 2025, the steepest decline of any generation in 5 years, according to the FICO report.
Behind the numbers lies a wave of economic forces. The financial cushions of pandemic-era relief programs have ended, inflation continues to erode real wages, and student loan repayments have resumed after years of pause.
According to an article on aol.com, about one-third of Gen Z borrowers carry student debt, twice the national rate, and millions missed payments in 2025 alone.
And the consequences are lasting. According to experian.com, a single late payment can slash a credit score by more than 100 points and stay on record for up to seven years. That can translate to real money according to an article on aol.com: someone with a 676 score might pay $300 more each month on a $300,000 mortgage compared with a borrower with excellent credit. Over a decade, that adds up to over $60,000 in lost cash — enough to buy a small condo in some cities.
Debit, BNPL, and the credit blind spot
Part of the challenge stems from how Gen Z prefers to spend. They rely heavily on debit cards, peer-to-peer payment apps, and “buy now, pay later” (BNPL) services — tools that offer speed and flexibility but don’t typically report activity to credit bureaus.
That leaves millions of financially active young adults effectively invisible to lenders.
“Today’s young adults borrow just to reach baseline stability, not luxury,” said financial expert Erin Stillwell in an article on msn.com. “They’re the first generation facing high inflation, digital credit, and social-media-driven consumption pressure all at once.”
Building credit in an unforgiving economy
The structural barriers are real, but the habits that help build financial resilience remain simple — and, for many, surprisingly “old school.” Experts agree on a few key moves:
- Avoid BNPL, use credit — While “buy now, pay later” plans seem harmless, credit cards have one major advantage: they help build credit history when used wisely.
- Pay yourself first — Automate savings directly from each paycheck, even if the amount feels small. The habit matters more than the number.
- Make every payment on time — Payment history accounts for 35% of your FICO score, the single most influential factor.
- Get financially literate — Skip the TikTok “gurus.” Take free online courses, use budgeting tools, or speak to a certified financial planner.
- Plan for the long game — Even if retirement feels far off, investing early allows compound interest to do the heavy lifting later.
Content Creator Brooke Bunch may be reached at brooke_bunch@yahoo.com.
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