Credit ratings are falling again at a rapid pace, marking the sharpest decline since the Great Recession, amid rising living costs and the resumption of student loan repayments.<\/p>\n
The average FICO score in the United States fell by two points this year \u2013 the largest drop since 2009, according to analysts.<\/p>\n
Although creditworthiness remains above pre-crisis values, the downward trend has continued for the second year in a row. FICO notes an increasing share of borrowers with delinquencies on auto loans, credit cards, and personal loans.<\/p>\n
Younger generations are feeling a double squeeze: high student loan debt combined with weak entry-level opportunities in the labor market.<\/p>\n
Generation Z has experienced an average credit score decline of three points \u2013 the largest among all age groups since 2020, when the pandemic began.<\/p>\n
Key takeaways for families and lenders<\/p>\n
These data highlight the shift between optimism in financial markets and the real difficulties people face in daily life. While stock indices continue to rise, a significant portion of the population feels financial pressure.<\/p>\n
\u201cWe are seeing an economy with a K-shaped curve, where those with wealth in stock market portfolios and rising home values are thriving, while others face high rates and affordability challenges.\u201d<\/p>\n
\u2013 Tommy Lee, CNN<\/p>\n
According to FICO, delinquency rates on auto loans, credit cards, and personal loans are approaching or at their highest levels since 2009.<\/p>\n
14% of Gen Z have experienced a significant drop in their credit score by 50 points or more in the last year \u2013 the highest figure among all periods and twice that of 2021.<\/p>\n
After a COVID-19-related pause, student loan delinquencies were not recorded in credit files until February. The Department of Education resumed federal student loan collections in May.<\/p>\n
According to FICO, about 34% of Gen Z have outstanding student loans \u2013 this is well above the national average, intensifying financial pressure on young people.<\/p>\n
\u201cMy credit score plummeted sharply because I had to compromise and take a job that pays very little.\u201d<\/p>\n
\u2013 CNN<\/p>\n
In the long run, this means lenders and policymakers must account for elevated risks and develop solutions to support borrowers during the slow economic recovery.<\/p>\n","protected":false},"excerpt":{"rendered":"Credit ratings are falling again at a rapid pace, marking the sharpest decline since the Great Recession, amid…\n","protected":false},"author":2,"featured_media":27380,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,27203,27204,27202,27205,219,27206,27207,27208,27209,111,43,139,69,27210,27211,27212],"class_list":{"0":"post-27379","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-credit-risk","10":"tag-credit-scores-decline","11":"tag-credit-scores-decline-fico-score-drop-generation-z-credit-student-loan-repayment-us-credit-trends-financial-pressure-rising-living-costs-loan","12":"tag-economic-recovery","13":"tag-economy","14":"tag-fico-score-drop","15":"tag-financial-pressure","16":"tag-generation-z-credit","17":"tag-loan-defaults","18":"tag-new-zealand","19":"tag-news","20":"tag-newzealand","21":"tag-nz","22":"tag-rising-living-costs","23":"tag-student-loan-repayment","24":"tag-us-credit-trends"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/27379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=27379"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/27379\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/27380"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=27379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=27379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=27379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}