Credit scores are dropping as Americans face financial strain

The national average FICO score dropped to 717 in October from 718 in July, the first decrease in a decade—despite having low unemployment rates and reduced threat of recession.

Analysts attribute high-interest rates and inflation as the factors. Other factors contributing to the dip include more missed payments and rising debt levels.

Americans’ credit card debt soared to a record-high of $1.13 trillion in last year’s fourth quarter.

Banks are experiencing higher net charge-off rates on credit card loans, with delinquencies on credit cards and auto loans reaching levels not seen in over a decade.

However, consumers continue to prioritize mortgage and car loan payments.

While the drop in credit scores is notable, economists remain optimistic about consumer credit quality due to low debt burdens, a strong job market, and rising household wealth.