What the Mortgage Market Needs to Know About the Latest Consumer Credit Trends (Sponsored by FICO)
Ethan Dornhelm is Head of Scores Analytics with FICO
The U.S. consumer credit landscape is undergoing a profound transformation. Economic volatility, inflationary pressures, and the resumption of student loan payments have all contributed to significant shifts in how Americans are managing debt, prioritizing payments, and monitoring their financial health. In this environment, the need for actionable, data-driven insights has never been greater.
To help lenders and industry stakeholders identify key trends in consumer credit health, FICO recently released its inaugural FICO® Score Credit Insights report. This first-of-its-kind analysis offers a deep dive into evolving credit behaviors across the U.S., empowering lenders, policymakers and industry advocates to understand the forces shaping consumer credit and to respond with confidence and agility.
Here are key trends that mortgage professionals and financial institutions need to remain aware of in a rapidly shifting economic landscape:
National credit health shifts
One main finding from the report is a modest but meaningful decrease in the national average FICO® Score. In 2025, the average score stands at 715, down two points from the previous year. The drop marks a notable change after years of what has largely been gradual improvement in the national average FICO® Score. Our analysis found that this shift was primarily driven by rising consumer credit card utilization and an uptick in missed payments, influenced in part by the resumption of student loan delinquency reporting following a multi-year pause.
Amid this bumpy landscape, Americans are taking a more proactive approach to managing their credit health. Consumer research conducted by The Harris Poll as part of the report revealed 71% of consumers check their credit scores multiple times a year, with nearly half of Gen Z and Millennials checking monthly. This growing vigilance reflects both the increased availability of credit monitoring tools and a heightened awareness of the role credit plays in financial opportunity.
Gen Z faces greater volatility
The report also highlights distinct challenges facing younger Americans. Members of Gen Z (ages 18-29) experienced the largest year-over-year average FICO® Score decrease of any age group, along with a higher incidence of significant (50+ point) year-over-year score swings compared to the national average. Gen Z consumers have had less time to build savings and are less likely to benefit from stock market gains or home price appreciation, while being exposed to affordability challenges, inflation, and higher interest rates. And notably, 34% of Gen Z consumers hold student loans, compared to just 17% of the total population.
These findings reflect the unique financial profiles and credit challenges faced by younger consumers, particularly in a period marked by economic uncertainty and the return of student loan obligations.
The K-shaped recovery
Another significant trend captured in the report is the changing distribution of credit scores across the population, a pattern often described as a “K-shaped economy.” Since 2021, the percentage of consumers in the middle range of FICO Scores (600-749) has declined from 38.1% to 33.8%, while the share of consumers in both the highest and lowest score brackets has increased.
This pattern reflects the financial stress being felt by some borrowers impacted by affordability concerns stemming from inflation and higher interest rates, while also reflecting that others have benefited from increases in their stock market portfolios and home price appreciation. Additionally, increased education and awareness of the importance of credit scores have helped consumers understand what they need to do to more effectively manage their credit.
Shifting payment priorities, with auto payments rising above mortgage
The report also reveals a notable evolution of the payment hierarchy. Consumers are now 19% more likely to pay auto loans than mortgages, with auto loans reclaiming the top spot in payment priority. Mortgages remained 56% more likely to be paid than personal loans, while personal loans are 64% more likely to be paid than bankcards.
However, among consumers with a prime FICO® Score (700+), mortgage remained atop the payment hierarchy. Since higher-scoring consumers are more likely to make payments than lower-scoring consumers, the data reflects consumers’ desire to keep a particular product in good standing more than their ability to pay. And, unlike lower-scoring consumers, this population is more likely to be able to choose whether to make their auto or mortgage payment and choose mortgage, while lower-scoring consumers might only be able to afford the auto payment but not the mortgage payment. Additionally, with recent home price increases, high-scoring consumers are more likely to have home equity they can tap into in order to help them avoid mortgage delinquency.
Notably, student loans now rank lowest in payment priority, even among high-scoring borrowers. These shifts highlight how consumers are adapting to economic pressures by prioritizing the payments that protect essential assets.
Trends in delinquency rates
The report also tracks changes in delinquency rates across different credit products, including:
• Mortgages: Delinquencies are up 58% since 2021 primarily due to payment accommodations no longer being available, though they remain below pre-pandemic levels.
• Auto Loans: Delinquency rates have increased 24% since 2021, with affordability remaining a challenge across all score groups.
• Bankcards: Delinquencies have risen 48% since 2021, alongside a climb in utilization to 35.5%.
• Personal Loans: Delinquencies have declined from recent peaks, aided by tighter underwriting standards.
Specific to the mortgage industry, the 30-plus-day delinquency rate on mortgages (4.7% in 2025) has jumped year-over-year since 2022, as trends revert to pre-pandemic norms following the historically low delinquency rates observed early in the pandemic due to payment accommodations. Still, the delinquency rate continues to be lower than the pre-pandemic figure from 2019 (5.1%) and remains less than half the Great Recession figure from 2009 (10.1%). Homeowners have benefited from recent home price increases, which have enabled them to build home equity and find other solutions rather than going delinquent on their mortgage.
The importance of data-driven insights in an evolving economic landscape
The FICO® Score Credit Insights report offers more than just a snapshot of consumer credit trends; it provides meaningful context and actionable information for a wide range of industry participants. FICO is committed to empowering consumers with credit education and equipping banks, fintechs, and credit risk leaders with powerful, interactive tools to explore new strategies for expanding access to credit.
For decades, we have led the way in financial inclusion and credit risk innovation. Our FICO® Score is used by 90% of top U.S. lenders and continues to set the standard for objective, data-driven insights that empower smarter lending decisions and promote consumer financial health. With the launch of the FICO® Score Credit Insights report, we are delivering unparalleled visibility into the trends and shifts that define today’s credit environment.
This report leverages FICO’s proprietary credit data analytics and decades of experience to provide a current view of consumer credit health. By surfacing key findings on score movements, payment hierarchies, generational differences, and delinquency trends, we are arming decisionmakers across consumer finance industries with the intelligence needed to navigate uncertainty and seize new opportunities. As economic conditions continue to evolve, data-backed decision making will be critical. FICO remains committed to providing the mortgage market with the insights and tools needed to support responsible lending, informed policy, and consumer empowerment.
Access the full FICO® Score Credit Insights report here.
(Sponsored content includes material submitted independently of the Mortgage Bankers Association and MBA NewsLink and does not connote an MBA endorsement of a specific company, product or service. For more information about sponsored content opportunities, contact Bill Farmakis at bill@jlfarmakis.com or 203/834-8832.)
