Gen Z credit Scores Plummet, signaling Broader Economic Concerns
Washington D.C. – credit scores among Gen Z consumers are experiencing the steepest decline of any age group,according to a recent report from FICO,raising โconcerns about their financial futures and perhaps signaling broader economic headwinds. The average credit score forโ those aged 18-29 fell by the largest margin in the past year, a trend experts attribute to delayed financial milestones and increasingโค economic uncertainty.
This downturn isn’t simply a matterโข of young people โhavingโ limited โคcredit history. It reflects a growing struggle to manage debt and establish financial stability in a challenging economic landscape. The decline impacts Gen โฃZ’s abilityโ to secure loans for major purchases like homes and cars, potentially hindering wealth-building opportunities โฃand exacerbatingโค existing financial inequalities. Understanding how to build and maintain โcredit is now more crucial than ever for this generation.
Several factors are contributing to the trend. Job market uncertainties are prompting many young adults to postpone importantโ financial commitments, delaying the establishment of credit. Simultaneously, a growing number are falling behind on existing payments.
Here’s how toโ navigate the current climate and build a strong credit foundation:
* Monitor Your Credit: Regularly checking your credit score is โคessential. Services like FICO, Experian and Credit Karma offer free access to credit scores and reports.
* โค prioritize Timely Payments: Payment history accounts for approximately 35% โขof your FICO score. Consistent, on-time payments – whether minimum or full balance – are paramount. setting up automatic payments can help avoid missed deadlines.
* Manage Credit Utilization: Keep yourโ credit utilization – the amount of credit you’re using compared to your totalโค credit limit – low. While avoiding debt is ideal, utilizing between 10% and 30% ofโ yourโค available credit โขis generally considered beneficial.
Anna Kleiber can be reached at akleiber@gannett.com.
