American consumers are seeing their credit scores tumble slightly as they take on more debt and struggle with rising costs.
In fact, Americans’ average credit score fell to 715, down two points year over year, according to the latest FICO Score Credit Insights study.
The dip was primarily driven by spikes in delinquencies on auto loans, which jumped 24% since 2021, and credit cards, up 48% over the same time period. Additionally, credit utilization rates — the percentage of available credit a consumer uses — is at 35.5% today versus 29.6% in 2021, FICO reported.
Though average credit scores are in a solid credit tier, the downward trend raises some concerns about Americans’ financial health and the economy.
The decline in average credit scores isn’t due to a single factor but rather several happening at once.
Federal student loan collection activity restarted in February after a multiyear pause in reporting. Now, these payments are appearing on credit reports again, and those who fall behind are seeing the hit to their credit scores.
As of August, 42.5 million federal student loan borrowers owed $1.661 trillion in outstanding balances. However, FICO’s study found that 3.1% of total scorable federal student loan borrowers (6.1 million consumers) had a student loan delinquency added to their credit report from February to April 2025.
Meanwhile, soaring credit card and auto loan delinquencies, along with higher credit usage overall, have strong correlations to lower credit scores, said Rod Griffin, senior director of consumer education and advocacy with Experian.
Outstanding credit card balances soared to $1.21 trillion in the second quarter of 2025, up 5.87% over a year ago, according to the Federal Reserve Bank of New York. This is driving up utilization rates, which are “skyrocketing,” Griffin noted.
“We’re still seeing average scores above 700, which suggests that they’re still paying those debts on time, but they’re taking on more debt so there’s more risk that they won’t at some point,” Griffin said.
Still, falling credit scores might show cracks in Americans’ overall financial health and lead to a slowdown in consumer spending, said Sarah Brady, a credit and personal finance expert. The ripple effects on the economy could be substantial; consumer spending fuels roughly two-thirds of U.S. economic activity, according to U.S. Bank.
And when finances begin to strain households, consumers fall back on bad habits.
“During times like these, consumers have a tendency to turn to high-interest and high-risk financial products like credit cards to cover their basic expenses,” Brady said. “With credit card interest rates currently averaging above 21%, they’re a solution that will only lead to more financial problems.”
It’s normal for your credit score to fluctuate here and there, so don’t panic if you see a slight dip. But larger score drops could be a sign of issues you need to address. Here’s what to do.
You can get free copies of your credit report from AnnualCreditReport.com from each of the three major credit bureaus: Experian, Equifax, and TransUnion. In doing so, you might find fraudulent charges or loan activity. Reach out to creditors immediately so they can lock down your accounts and remove fraudulent charges.
If errors appear on credit reports, don’t panic. “Instead, follow the instructions on the credit reports (usually near the last page) to file a dispute for free. If you have any documents that support your claim, be sure to include them when you file,” Brady said.
Credit score dips typically follow a pattern, she noted.
“For major drops in your credit scores, the main culprit is likely a missed loan or credit card payment,” Brady explained. “Other reasons for a score drop can include increases in your debt balances or several credit applications made in a short period of time.”
You might be tempted to pay only the minimum amount due on your credit cards, but that will cost you. Brady warned that carrying balances month to month leads to “outrageously high interest charges and you can get trapped in a never-ending debt cycle.”
Griffin, too, emphasized the importance of charging amounts that you know you can repay in full each month — even if they’re smaller — to avoid interest charges and potential late payments.
“Make a small purchase every month, pay the balance in full,” he advised, noting that even $10 or $20 paid off immediately helps maintain account activity.
Brady stressed the importance of having a financial cushion.
“If you don’t have any money saved, you’ll always be at risk of needing credit cards or loans to help you cover unexpected expenses,” she said.
Brady noted this strategy helps consumers avoid the predatory high-interest products they often turn to during financial stress.
Having an on-time payment history is your best bet toward building (and maintaining) a solid credit score.
“You can always expect your payment history to be the biggest factor that impacts your credit scores,” Griffin said. “Why? Because your history with debt payments in the past couple of years is the best indicator of whether or not you’ll make your payments in the future.”
No matter what, don’t skip monthly credit card payments or pay late (even if you can only afford the minimums).
Building a good credit score, first and foremost, is about discipline and awareness. Avoid opening too many credit cards, and understand the terms you’re signing up for.
“The key is for you to be in control of your money — and it not be in control of you,” he said.
If you need additional support, both experts recommend seeking help from a certified credit counselor with a nonprofit agency affiliated with the National Foundation for Credit Counseling or the Financial Counseling Association of America. Avoid any companies that promise to wipe out your debt or consolidate it; they often overpromise and underdeliver.
“The worst place to go is for-profit credit repair or debt settlement companies, since they’re often expensive and predatory,” Brady said.
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