MW Gen Z's 'chicken before the egg' credit problem: How to build your score when lenders keep saying no
By Julian Torres
Half of Gen Z-ers say they don't have enough access to the credit they need to reach their financial goals
Gen Z-ers know credit is key to reaching their financial goals - but about half of them say they're struggling to access it in the first place.
Gen Z-ers overwhelmingly view credit as key to their financial futures - but actually getting their hands on it is proving to be a generational hurdle.
In a new TransUnion (TRU) survey, 98% of Gen Z respondents said access to credit and lending products was important to achieving their financial goals. Yet only 53% said they had sufficient access to it.
That dismal outlook is likely driven by the trouble young adults are facing in obtaining loans for major life purchases - like buying a home - Charlie Wise, head of global research and consulting at TransUnion, told MarketWatch. It aligns with New York Fed data that suggest Gen Z and millennial borrowers regularly face higher rejection rates for products like mortgages when compared to their older counterparts.
The path to those key financial products can be harder for younger borrowers, since they require a level of credit history and income stability that many in Gen Z, who are now between 14 and 29 years old, only just started building.
They're beginning their credit journey in a challenging environment - and it shows. A FICO $(FICO)$ report released this spring found that 14.4% of consumers ages 18 to 29 saw their credit scores drop 50 points or more between October 2024 and October 2025, likely linked to issues making student-loan repayments. Gen Z consumers have an average score of 676, which just passes into FICO's "good" credit-score range. But that's still 39 points lower than the national average, according to FICO's 2025 Credit Insights report. Across generational scoring surveys, Gen Z routinely averages the lowest of any age group.
Worse, according to a USAA report, nearly half of Gen Z lacks a good understanding of what affects their credit score, indicating a generation of "motivated yet underinformed" credit builders. This lack of understanding can lead to misguided habits. For example, 53% of Gen Z respondents surveyed by Capital One $(COF)$ thought that carrying a balance on their credit card each month would actually increase their credit score.
Trouble navigating credit - combined with rigorous mortgage-lending standards, high home prices and elevated interest rates - can make homeownership and loans at manageable rates feel especially out of reach for Gen Z, Wise said.
"Even buying a car might be something that is out of reach" for them, said Rudri Patel, a certified financial-health counselor at MoneyLion - especially as the average new-car price approaches $50,000, pressuring borrowers to require financing or take on longer loan terms.
The credit knowledge and access gap is to be expected as a function of age and experience. "It's a whole lot easier to have a good credit score when you're older," said Matt Schulz, senior economic analyst at LendingTree (TREE). Older borrowers have had more time to take on credit and prove they can manage it, he noted, while many Gen Z borrowers are "just getting started."
'It's a circular thing. I need to get a house, but I also need credit to get a house - but how am I going to get that credit?' Rudri Patel, a certified financial-health counselor at MoneyLion
That puts young adults in a tough position where they need good credit to reach major financial milestones, but lenders often want to see a longer track record before extending larger loans. Patel described it as a "chicken before the egg" problem.
"It's a circular thing," she said. "I need to get a house, but I also need credit to get a house - but how am I going to get that credit?"
Experts say the answer is to start building a record of responsible credit use before needing to apply for a mortgage or other major loan.
"One of the biggest mistakes is just waiting too long to get started," Schulz said. This is because established credit history and a consistent pattern of timely payments are vital to achieving a strong credit profile, Patel added. It's never too early: Parents with good credit can even add their newborn babies as authorized users on their credit cards to help them build a credit history.
"The longer your track record, and the more you show banks that you can be responsible with the money they lend you, the more likely they are to be willing to lend more," Schulz said.
So how can Gen Z start building credit today for life's biggest loans down the line?
For most beginners, taking these few, easy steps can have a significant impact on strengthening your long-term creditworthiness - not to mention building your financial confidence.
Get your credit history and score
Even if you don't have credit yet, checking your credit report can be the first step toward building it. You can request a free weekly report from the three major bureaus (Equifax $(EFX)$, Experian (UK:EXPN) (EXPGY) and TransUnion) at AnnualCreditReport.com. These reports detail your credit history, including account openings and closures, and allow you to check for potential errors or fraud.
While the report shows your history, checking your actual score is a separate step. You can access your FICO score via a free Experian membership, or view your VantageScore as a complimentary perk from many major banks.
Get a beginner-friendly card
There are a few beginner-friendly credit cards and tools to build credit for the first time:
-- Secured cards: These function like standard credit cards, but require a cash deposit that serves as your credit limit. This deposit acts as collateral to the lender while you build a history of responsible payments. Over time, consistent on-time payments can improve your credit profile, potentially allowing you to graduate to a standard unsecured card and recover your deposit.
-- Student credit cards: Eligible students can also apply directly for student credit cards that provide beginner spending limits. These cards are often targeted at young credit users with little to no credit history, and can be a direct route to building a credit profile.
-- Become an authorized user on someone else's card: Authorized-user status can be "an enormously powerful tool if used properly," Schulz said. By joining a trusted family member's account, you can build credit through their responsible habits. But the primary cardholder needs strong credit habits for the arrangement to help, because negative activity can hurt the authorized user's credit.
You can check out more tips on picking your first credit card, and how to become an authorized user on a card, here.
Stop leaning on your debit card
Shift some of the spending you're already doing with debit cards (which aren't factored into your credit score) to a credit card - and pay it off each month. For example, start putting a recurring subscription, phone bill or small monthly purchase on the card, which you pay off in full each pay period. This maintains regular activity while keeping the credit utilization low - ideally below 30%, Patel recommended.
Most importantly: Automate payments
Schulz highlighted automating payments as one of the most effective tools available to navigate credit worry-free. "Nothing matters more to your credit than your payment history," Schulz said. "It's most of the ball game." Even one missed payment "can do real damage to your credit score," Schulz said, and can stay on a credit profile for up to seven years.
Be careful with buy-now-pay-later
Buy-now-pay-later products can be "a nonproductive way to build credit," Patel said, "especially if you can qualify for a credit card." More often, buy-now-pay-later can be a one-way street - as on-time payments aren't considered on your credit history, while missed ones can be reported to credit bureaus and hurt a credit profile, Patel warned.
"If you do miss a payment ... that will show up," she said.
Genna Contino contributed.
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-Julian Torres
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June 18, 2026 11:38 ET (15:38 GMT)
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