FICO Finds Over 25% of Gen Z Opened New Credit Cards, Utilization Hits 44%

Why It Matters

The data signal a generational shift in credit usage that could reshape risk models for banks, fintechs and credit bureaus. Higher utilization and frequent score drops increase the likelihood of defaults, prompting lenders to reassess pricing, credit limits and eligibility criteria for younger borrowers. For policymakers, the findings underscore the need for targeted financial‑literacy programs that address misconceptions about credit‑card balances and utilization. For Gen Z individuals, the pattern of relying on credit cards for everyday expenses may have long‑term repercussions on borrowing costs, mortgage eligibility and overall financial health. Understanding and correcting these behaviors early could prevent a cascade of credit‑score erosion that hampers wealth‑building opportunities for an entire generation.

Key Takeaways

• 25% of Gen Z adults opened at least one new credit card in the past year, the highest rate among all age groups.
• Gen Z credit‑card utilization averages 44%, four times the 10% level recommended for strong scores.
• 14.4% of Gen Z saw score drops of 50 points or more, versus 10.1% for the overall population.
• 48% of Gen Z who lost jobs or faced reduced income relied on credit cards for basic expenses.
• Student‑loan delinquency affected 7.1 million borrowers, contributing to an average 62‑point score drop since Jan 2025.

Pulse Analysis

The FICO findings expose a structural vulnerability in the credit ecosystem that could reverberate across the broader economy. Historically, credit‑card utilization has been a leading indicator of consumer stress; the current 44% average for Gen Z suggests a cohort that is both financially strained and less experienced in managing revolving debt. This combination amplifies the risk of a wave of defaults that could force banks to raise interest rates or tighten credit, feeding back into higher borrowing costs for all consumers.

From a competitive standpoint, fintech lenders that specialize in low‑interest, installment‑based products may find an opening to capture a market segment disillusioned with traditional credit‑card debt. However, they must balance aggressive acquisition with robust underwriting to avoid the same pitfalls that are eroding Gen Z’s scores. Meanwhile, traditional banks may double down on credit‑education initiatives as a differentiator, positioning themselves as partners in financial health rather than merely lenders.

Looking ahead, the trajectory of Gen Z’s credit behavior will likely hinge on macroeconomic variables—interest‑rate trends, inflation, and the labor market—combined with the effectiveness of policy interventions aimed at financial literacy. If educational programs can shift the perception that carrying a balance improves credit, utilization could fall, stabilizing scores and reducing systemic risk. Conversely, if high‑cost credit remains the default safety net, we may see a prolonged period of elevated delinquency rates that could pressure regulators to revisit credit‑reporting standards and consumer‑protection rules.