Credit scores slipped as mortgage delinquencies and student debt reshaped borrower risk
The average US FICO score fell to 714 in spring 2026, extending a slow decline that began in 2023. Yet nearly half of consumers still sat in top‑tier credit bands, underscoring a widening divide in borrower profiles.
FICO’s latest FICO Score Credit Insights report showed a record 48.1% of consumers with scores of 750 or higher, up from 43.3% in 2019, while lower-score segments also expanded.
The middle thinned out, echoing the “K-shaped” patterns already visible in mortgage performance and household debt data.
Student loans and mortgages pull scores lower
“The resumption of required student loan payments and a continued, modest rise in mortgage delinquencies nudged the average score slightly lower,” said Ethan Dornhelm, head of scores analytics at FICO.
“What makes this particularly interesting is that we're simultaneously seeing a record share of consumers demonstrating strong, consistent credit behaviors. The result is a credit market that's both more challenging for some and more rewarding for others—a dynamic that requires more nuanced strategies from lenders.”
FICO said student loan delinquency reporting and rising mortgage delinquencies were the main drags on scores, while auto, credit card and personal loan delinquencies largely stabilized.
“After severe delinquency on student loans took a big jump in April due to resumption of delinquency reporting, there was only a 0.1% increase in student loan delinquency between April and October 2025,” the report said.
Previous New York Fed data found overall mortgage delinquency rates remained relatively low despite record household debt, supported by strong home equity and tighter underwriting, even as lower‑income borrowers showed rising stress.
US household debt climbed to $18.6 trillion in late 2025, with analysts describing a “K‑shaped” recovery in which higher‑income households kept building wealth while others fell behind.
Within mortgages, TransUnion reported 60‑day‑plus delinquency rates creeping back toward pre‑pandemic norms, with FHA and some VA borrowers showing the sharpest deterioration.
Gen Z and subprime borrowers also carried a growing share of unsecured debt, making housing affordability shocks more acute when scores slipped.
Gen Z stands out in credit card adoption
Gen Z consumers remains the most active cohort in traditional card adoption, FICO found, with more than one in four opening at least one new card in the past year.
“Market speculation suggests Gen Z has shifted away from traditional credit cards in favor of alternative lending products,” FICO said.
“The data tells a different story: A higher percentage of Gen Zers open new bankcards than any other age group, which in reality positions them as the most active cohort in traditional credit card adoption.”
Consumers get more intentional about credit
At the same time, consumers appeared more deliberate about how they used credit. New polling by The Harris Poll for FICO showed 83% of Americans prioritized maintaining or improving their credit scores in 2026, even as nearly one in four reported making less than the minimum payment or skipping a card or loan payment in the prior year because of inflation.
“The findings point to a shift in how consumers relate to credit—it’s no longer passive, it’s intentional,” said Jenelle Dito, vice president of consumer empowerment programs and partnerships at FICO.
“People are monitoring their credit and thinking strategically, but many still lack clarity on the fundamentals. Closing that knowledge gap is critical because consumers aren't just seeking better financial outcomes—they're seeking peace of mind, making this as much about emotional well-being as credit health.”
FICO said two‑thirds of consumers either misunderstood or were unsure whether income directly affected their credit scores, a misconception that could hinder score improvement.
Advocacy groups have warned that high‑rate revolving debt has become harder to clear, with one analysis estimating that more than 40% of adults carried month‑to‑month credit card balances that they could not fully pay off.
The FICO Score Credit Insights findings were based on anonymized credit bureau data underlying FICO Scores across US consumers. The accompanying consumer survey was conducted online by The Harris Poll from Feb. 2–4, 2026, among 2,059 US adults aged 18 and over.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
