The Average Credit Score Just Fell at Fastest Pace Since the Great Recession
In another indication of a puttering economy, the average credit score in the U.S. has fallen by two points since this time last year.
The credit scoring firm FICO said Tuesday that the average credit score for all U.S. consumers is now 715, down from 717 logged in October 2024. According to separately released FICO data, the decline marks the first time since 2009 during the Great Recession that the average FICO score has fallen by two points within one year.
FICO scores range from 300 to 850, and a score of 715 is considered to indicate “good credit” overall, but the two-point decline in consumers’ collective score is raising alarm bells. Each year, average credit scores tend to rise — sometimes by as much as five points. Any decline is rare, and two-point declines are especially so.
The reason behind the decline is that more Americans are falling behind on many of their loan payments.
“Delinquency rates on auto loans, credit cards, and personal loans are at or near their highest levels since 2009,” economist Amy Crews Cutts says in the FICO report.
These warning signs are “more consistent with an economy in recession than one still in expansion,” she adds.
It's important to note that a U.S. recession has not been officially declared, though economists are growing increasingly wary of one. One Mark Zandi, chief economist at Moodys, says the odds of recession in the next 12 months are now "uncomfortably high."
Gen Z’s credit takes an outsized hit
Just as Gen Zers are starting off their financial lives, their credit scores are getting clobbered. Born between 1997 and 2012, Gen Z borrowers have an average credit score of 676, according to FICO — that’s 39 points lower than the national average.
While younger consumers' credit scores always tend to lag behind those of older consumers, the average score for these young borrowers also fell more than others, too — dropping by three points since last year. Experts say missed federal student loan payments are largely to blame for falling scores, now that delinquencies are being reported to the credit bureaus again after a five-year pause.
Tommy Lee, senior director of analytics and scores at FICO, suggests the issue could get worse before it gets better.
“Additional student loan delinquencies are expected over the next few months, as not everyone who has missed student loan payments has been reported as delinquent yet,” Lee says in a FICO analysis.
Federal student loans are unique from other items on one’s credit history, like credit cards or auto loans. For most loans, delinquencies are broken up into three categories: 30 days, 60 days or 90 days. The later the missed payment, the harder it dings one’s score.
With these student loans, however, they get reported only once they’ve reached the 90-day mark. So when student loan borrowers fall behind, their scores go from no penalty one day to a harsh 90-day delinquency the next.
According to research from the New York Federal Reserve Bank, a new student loan delinquency showing up on a borrower’s credit report can tank their credit score by more than 150 points, depending on their starting score.
For student loan borrowers with scores lower than 620, a delinquency knocks their score down 87 points. However, for borrowers with great credit — 760 or above — a delinquency sets them back 171 points on average.
FICO research suggests that a wave of new delinquencies could be coming soon, further weighing down the nation’s average credit score. So far, about 2.7 million student loan borrowers have a delinquency reported, and the ramifications have already been harsh.
Another 5.4 million people are at serious risk of delinquency, FICO says, because they haven’t made a single student loan payment this year.
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