Generation Z is opening credit cards faster than other age groups, and the shows it’s affecting some of their . Gen Z cardholders are more likely to overuse credit and see significant credit score drops than older borrowers.
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Gen Z Is Opening More Credit Cards
Gen Z consumers ages 18 to 29 are opening new cards faster than other age groups, per the FICO report, and using them heavily. Their has been about 44% since October 2023, about the same as that of millennials.
Used responsibly, early credit card use can help young adults build the credit history that they need to rent an apartment, qualify for utilities, finance a car or buy a home.
FICO’s report points to credit-conscious but financially stretched Gen Z consumers, with 60% of Gen Z respondents reporting credit score anxiety and 38% saying they’d likely open new credit cards as a financial cushion.
Why New Cards Can Create Credit Score Risk
Using a credit card as a financial cushion, including running up balances or , can cause credit score damage, especially when your credit history is thin.
Gen Z’s credit utilization rates, around 44%, are higher than recommended. Experts typically advise a credit utilization ratio of 30% or less, and those with excellent credit usually have utilization rates below 10%. Credit utilization is the second most important factor in calculations.
“Gen Z understands that having a credit history is important, but they don’t have a framework to really understand it,” says Sheila Walsh, certified financial planner and faculty member at Georgetown University. “For example, many don’t understand how credit scores and credit reports work. There is a knowledge gap that can lead to Gen Z trying to ‘build credit’ in ways that can inadvertently hurt them.”
Walsh says a common misconception is that carrying a credit card balance helps build credit. “Early credit can be sensitive, so a late payment or high credit utilization can manifest as volatility, and can lead to a larger score drop,” she says.
Carrying balances, applying for several cards in a short period of time or using a new card to add spending power without paying it back can hurt Gen Z credit scores.
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Young Adults Are Seeing Bigger Score Drops
According to the FICO report, Gen Z is more likely than other age groups to experience large credit score drops, most likely due to student loan repayment issues. Overall, 10.1% of consumers experienced FICO score drops of 50 points or more from October 2024 to October 2025, but it was 14.4% among Gen Zers.
Since pandemic-era student loan protections ended, millions of student loan borrowers with a payment due had a new delinquency on their credit report and an average 62-point score drop.
For young borrowers, credit issues can compound. A student loan delinquency can quickly drop your score, and a maxed-out credit card or missed payment on top of it adds to the problem.
“Gen Z consumers who have student loans and thin credit histories are at a huge risk for late or delinquent payments,” says Paige Wingler, vice president of consumer lending at Skyla Federal Credit Union. “With little to no credit history, one late or missed payment can hurt credit scores before they have a chance to start their careers after graduation.”
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How Gen Z Can Build Credit Using Cards
Start with a and use it for purchases you’ve budgeted for, such as gas, groceries or streaming subscriptions, then pay the balance in full each month. Consistently paying your credit card off every month builds the positive payment history you need to build a good credit score while avoiding interest charges or unmanageable debt.
Keep your balance well below your credit limit. It should be less than 30% of your credit limit, but lower is better. On a card with a $500 credit limit, your reported balance should be under $150. Carrying a balance month to month won’t help your score and means you’ll pay interest on it.
Applying for triggers multiple and lowers your average account age, both of which can hurt your score.
“One very simple step Gen Z can use to build healthy credit is to know their interest rate,” says Walsh. “Another simple step is to check their credit reports. Errors happen, and it’s important to . Being aware and building early habits can help shape a healthy credit profile for years to come.”
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