Young Americans have higher credit scores today than before Covid

Gen Z’s Credit Scores Are Climbing While the Broader Economy Struggles

Sandego.net – At a time when inflation has kept grocery bills elevated and hiring has stalled across much of the country, a quiet shift in household balance sheets is unfolding among the youngest adults in America. New data from FICO, the company behind the most widely used credit-scoring model in the United States, reveals that Americans aged 18 through 29 now carry, on average, higher credit scores than they did in the months immediately preceding the pandemic. The jump — roughly 17 points since 2019 — is the largest gain recorded across every age bracket FICO tracks. The next-biggest improvement belongs to the 30-to-44 cohort, the group commonly labeled Millennials.

The timing of the gains matters. Analysts point to the early months of the public-health emergency, when federal authorities suspended student-loan payments for millions of borrowers, as the period during which most of the score improvement occurred. With monthly obligations temporarily lifted, younger consumers were able to redirect cash flow toward other debts, build savings, and avoid the late-payment marks that drag scores downward.

A Personal Story of Repayment and Recovery

Kelly Klein, now 31 and based in Nashville, Tennessee, walked out of college carrying $100,000 in student loans. She worked as a loan officer at a community development financial institution and, for six years after graduation, funneled every commission check toward eliminating that balance.

“I expected I’d never pay off my student debt,” Klein recalled. “Every commission check I earned for the first six years went to paying off my debt. Every single penny.”

A decade later, Klein is debt-free, her retirement account is well funded, and her credit score sits in the top tier. She credits much of her financial literacy to free resources she discovered online — social-media educators, a complimentary webinar on opening a brokerage account, and self-study on tax strategies and maximizing credit-card rewards.

“We have a lot more knowledge than previous generations did. A lot of it was gate-kept, especially from women, and tailored toward men. Luckily, I feel like financial education is more available,” she said.

Why Younger Borrowers Are Scoring Higher

Experts identify several reinforcing factors behind the score gains. First, younger Americans have grown up in an era of persistent economic turbulence — recessions, pandemic disruption, housing-market shocks — which has made them unusually attentive to how credit scores translate into future borrowing costs.

“Gen Z is pretty savvy about credit. And they are more aware of credit scores, in part because there have been so many economic headwinds during their lives,” said Matt Schulz, chief credit analyst at LendingTree.

Second, younger borrowers are typically at the very start of their credit histories. FICO’s scoring model does not factor in age directly, but it does weigh the length of time a person has made on-time payments. A consumer who has maintained a clean record for three or four years, even if the total dollar amount of debt is modest, will see that track record reflected in a higher score. As borrowers graduate from credit cards and student loans into auto loans and eventually mortgages, they add product diversity to their profiles — another variable the model rewards.

Schulz draws an analogy to a teenager borrowing a parent’s car for the first time. Early on, strict rules apply; over time, demonstrated responsibility earns trust. Credit works the same way: sustained, on-time behavior over months and years compounds into a stronger score.

The Broader Picture: A Slight Dip, Then a Gen Z Exception

It is worth noting that overall FICO scores across all age groups slipped modestly between April 2025 and April 2026. Within that softening trend, however, the 18-to-29 cohort bucked the direction, edging up by one point over the same twelve-month window. Roughly half of young adults in that bracket now hold a score of 700 or above — a threshold lenders generally associate with favorable terms on mortgages, auto loans, and unsecured credit.

As of April, 49.6 percent of borrowers aged 18 to 29 sat at or above that 700 mark, up from 41.4 percent in April 2020. The five-year trajectory, in other words, shows a meaningful structural improvement even as macroeconomic conditions have grown more punishing.

The K-Shaped Caveat

Behind the headline average, however, the distribution has stretched in both directions rather than compressing toward the middle. High scores have risen, but so have very low scores. The result is what FICO’s Tommy Lee, senior director, describes as pronounced fragmentation within the cohort.

“There’s a lot of fragmentation among Gen Z. Many of them are thriving. Some are struggling and relying on support from parents. We’re definitely seeing a K-shaped economy,” Lee said.

The K-shaped pattern — in which high-income earners accumulate wealth at a faster clip while lower-income households fall behind — is visible in housing data as well. Elevated mortgage rates combined with record-high home prices have pushed the average monthly mortgage payment for a first-time buyer roughly 57 percent higher than it stood before the current rate cycle. For a young adult just entering the workforce, that gap between what a lender will approve and what a listing actually costs represents a formidable barrier, one that can push otherwise responsible borrowers into the lower tail of the score distribution if they resort to shorter-tenor products or carry balances to bridge the gap.

The net effect is a generation that, on average, is managing its credit more competently than any prior cohort at the same life stage, yet whose internal spread has widened. The policy question that follows is not whether young Americans can handle debt responsibly — the data suggests they increasingly can — but whether the structural costs of housing and higher education will continue to outpace the wage growth available to them, keeping a meaningful share of the cohort locked out of the upper half of the credit distribution regardless of how carefully they manage a single credit card.