Credit scores are now falling at the fastest pace since the Great Recession

Credit scores are declining at the fastest rate since the Great Recession as many Americans struggle with high living costs and the restart of student loan payments.

The national average FICO score fell by two points this year, the steepest annual drop since 2009, according to data released Tuesday. Scores remain well above levels seen during the financial crisis, but this marks the second consecutive year of decline. More borrowers are falling behind on car loans, credit cards, and personal loans, FICO reported.

Younger Americans are under particular strain, facing both heavy student debt and a challenging job market. Gen Z borrowers saw their average credit scores fall by three points — the largest drop for any age group since 2020, during the pandemic.

The report highlights the gap between Wall Street and Main Street. U.S. stocks continue to hit record highs, but many households are squeezed by high rates and affordability challenges. “We’ve seen a K-shaped economy where those with wealth tied to stock market portfolios and rising home values are doing well, and others are struggling,” said Tommy Lee, senior director at FICO.