US consumers feel the heat as early signs of stress surface in credit health

Some American households are beginning to feel the pressure of persistent inflation and higher interest rates, with early signs of stress surfacing in credit health, news agency Reuters reported on September 17 citing new data from Fair Isaac Corporation (FICO).

The credit scoring company reported that the average national FICO score has slipped slightly, raising concerns about household resilience amid shifting economic conditions.

The overall score has declined by around two points. While modest, the drop reflects broader shifts in consumer creditworthiness. In 2021, nearly 38.1% of the population held scores in the 600–749 range. By 2025, that proportion had fallen to 33.8%, indicating a narrowing of the middle ground between strong and weak borrowers.


The most pronounced deterioration is among Generation Z, adults in their teens and twenties, whose scores have fallen faster than other groups. FICO attributed this to mounting student loan obligations. This year, student loan delinquencies reached a record high. Of the 21 million customers tracked by FICO with repayment dues, more than 10% are now behind on their obligations.

The findings present a contrast to the relatively upbeat tone struck by several of the country’s largest banks. Lenders have argued that consumers remain broadly stable and that the overall quality of their credit portfolios has not shown significant cracks. At the same time, wider economic data suggests the labour market is cooling, which could affect future repayment capacity.

For now, credit health still appears resilient. The national average score of 715 remains near record highs. Yet FICO cautioned that this metric should not be viewed as a forward-looking signal. "The average FICO Score is a lagging indicator of credit health, and there are certainly many risks to the future average credit score," the report said.

The tension between banks’ confidence and FICO’s warniUng highlights the fragility of household finances in a high-rate environment. While many Americans continue to manage their debts, younger borrowers weighed down by education costs are increasingly struggling. The direction of the job market and future policy moves on interest rates are likely to determine whether today’s dip in credit scores turns into a deeper problem for the US economy.