Americans’ Credit Scores Drop For The First Time in a Decade

The average national credit score of Americans has declined for the first time in more than a decade, according to recent data from FICO. Financial coach Jeannie Dougherty believes this drop reflects a shift in attitude toward personal finance in the U.S., signaling “uncertain economic times” and a lack of individual accountability for financial futures.

FICO’s March blog revealed that the national average credit score fell by one point to 717 in October 2023, suggesting that high interest rates and persistent inflation may be starting to weigh on consumers, especially those already struggling to manage their finances.

Several factors contribute to this consumer stress, including record-high credit card and household debt, a majority of Americans making sacrifices to pay monthly bills, and rising delinquencies.

Dougherty attributed some of the financial stress to the pandemic and societal shifts, arguing that mental health and spending habits are closely linked. She noted that traditionally, Americans prepared in their 20s or 30s to buy their first home, manage credit, and set up retirement savings. However, the pandemic disrupted this “normal” path, leaving many unable to find steady employment.

The financial coach also pointed to societal perceptions, such as the pressure to buy brand-new cars or large houses, as contributing factors to the shift in financial behavior. She observed that many individuals prioritize survival over improving their credit scores, grappling with “credit fixation” – resorting to credit cards for everyday expenses without a long-term repayment plan, often leading to bankruptcy.

Another issue, according to Dougherty, is the tendency for Americans to view indulgent spending as self-care. “But part of self-care is loving all parts of you – past, present, and future,” she said. “The sooner you start taking care of your future self, the more they will thank you, and it begins with your credit score.”

As the declining credit scores point to shifting financial attitudes and uncertain economic times, Dougherty emphasizes the importance of individual accountability and long-term financial planning for a more secure future.

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