Gen Z’s Credit Crisis: Why Young Adults Can’t Get a Financial Foot in the Door
At 22, Danny Benson graduated from Syracuse University with a degree in communications and a full-time job in public relations. But when he started apartment hunting in New York, he hit an invisible wall: no credit history. Without a credit card or loan in his name, landlords wouldn’t even consider his application. When he tried to open a Discover card, the only option offered was a secured card requiring a $200 deposit—a condition that felt less like an opportunity and more like a rejection .
“It just feels like there’s no answer,” Benson said. His story isn’t unique. Across the U.S., millions of Gen Z adults are struggling to build credit—not because they’re irresponsible, but because the traditional on-ramps to financial independence have all but disappeared.
Why Building Credit Early Matters
Credit isn’t just about getting a credit card. It’s the key to renting an apartment, buying a car, securing a phone plan without a deposit, and even landing some jobs. Financial experts say your 20s are the ideal time to start building a strong credit history—yet Gen Z is falling behind at an alarming rate .
The 3 Major Roadblocks Blocking Gen Z
1. Vanishing Entry-Level Credit Products
Banks have tightened lending standards since the pandemic. Unsecured credit cards for those with thin or no credit files are increasingly rare. Many young adults are steered toward secured cards—which require upfront cash they may not have—or denied altogether.
2. The Rise of “Credit-Lite” Spending
Gen Z prefers debit cards and “buy now, pay later” (BNPL) services like Afterpay or Klarna. While convenient, most BNPL loans don’t report to credit bureaus—meaning on-time payments don’t help build credit. In fact, missed BNPL payments can hurt scores without ever offering the upside .
3. Economic Headwinds
Stagnant wages, soaring rents, and resuming student loan payments have left many young adults with little financial cushion. Without stable income or savings, qualifying for even small lines of credit becomes nearly impossible.
Gen Z Credit Snapshot (2025)
| Metric | Gen Z (Ages 18–26) | Millennials at Same Age |
|---|---|---|
| Avg. FICO Score | 675 | 689 |
| % with No Credit File | 22% | 15% |
| BNPL Usage (Past 12 mos) | 58% | 34% |
What Can Be Done?
Experts suggest a mix of policy and personal strategies:
- Alternative credit scoring: Some fintechs now consider rent, utility, and phone payments in credit assessments.
- Credit-builder loans: Offered by credit unions, these loans place funds in a locked savings account while you make payments—building credit without risk.
- Authorized user status: Parents can add teens as authorized users on their cards (with spending limits) to help them start early.
Table of Contents
- Why Building Credit Early Matters
- The 3 Major Roadblocks Blocking Gen Z
- Gen Z Credit Snapshot (2025)
- What Can Be Done?
- Sources
