Danny Benson thought the hardest part of graduating from Syracuse University would be finding the right apartment in New York. What he didn’t expect was to be rejected before he even had the chance to apply.
At 22, newly graduated and without a credit card, Benson discovered that the real obstacle to independence wasn’t the housing market — it was America’s credit system.
Without a credit history, he tried applying for a basic card through Discover. The only option available, he said, required a $200 security deposit. “It felt like a dynamic of distrust,” he recalled. With no approval and nowhere to live, he moved back in with his parents on Long Island.
Benson’s experience illustrates a growing dilemma for an entire generation trying to establish financial footing in a system that both encourages spending and penalizes those without history. Generation Z — now in their late teens and twenties — faces a paradox: they are the most connected, tech-savvy, and financially aware generation yet, but struggle to build something as fundamental as credit.
The Weight of Starting from Zero
Financial experts often stress the importance of “starting early” with credit. Yet for many young adults, that’s easier said than done. Entry-level credit cards are becoming more restrictive, income requirements have risen, and major banks increasingly cater to high-income clients.
“There’s a real shortage of accessible products for people just starting out,” said Allie Danziger, vice president at AscentUP, a platform focused on financial education and career readiness for young professionals. “With fewer entry-level jobs and fewer credit-building opportunities, young people are falling behind.”
The numbers back her up. According to FICO Score Credit Insights, Gen Z borrowers saw the sharpest decline in credit scores among all age groups over the past year. Their average FICO score dropped to 676, well below the national average of 715. About 14% of young consumers lost 50 points or more — the steepest decline since 2020.
Part of the explanation lies in the broader economic context. Inflation, rising living costs, and the resumption of student loan payments after the pandemic have squeezed young Americans’ budgets. With fewer entry-level job opportunities, many remain financially dependent on their parents or stuck in underpaid positions.
The 2009 Law That Changed Everything
Before 2009, credit card companies were a familiar sight on college campuses — handing out applications, free T-shirts, and quick approvals. For many students, that was their first step toward building credit.
That changed with the Credit Card Accountability Responsibility and Disclosure Act of 2009, which prohibited issuers from approving cards for people under 21 without a verifiable income or a co-signer. While the law aimed to protect young consumers from debt traps, it also created a new entry barrier.
Today, most young adults rely heavily on debit cards or “buy now, pay later” (BNPL) apps for everyday expenses. The problem is that these tools don’t build credit history.
Worse still, some BNPL platforms have begun reporting to credit bureaus — meaning missed payments could now hurt creditscores, particularly for those juggling multiple short-term loans.
A Generation Carrying the Debts of the Past
Student debt is another structural obstacle. For many young Americans, their first exposure to credit comes through federal loans for college — but unlike credit cards, these debts offer little flexibility.
The resumption of student loan payments after the pandemic has triggered a wave of delinquencies among recent graduates. Benson, the public relations consultant, saw his score drop by 40 points after missing his first payment — a simple mistake with long-lasting consequences.
“We’re seeing a generation starting adult life already in debt,” said Scott Ward, a certified financial planner based in Birmingham, Alabama. “And the American credit system, which is supposed to reward consistency, ends up punishing those still trying to learn the rules.”
The Premium Card Paradox
While young people struggle to access basic credit, big banks are moving in the opposite direction. Major institutions like JPMorgan Chase and Citigroup are focusing on premium cards targeted at affluent clients with established credit histories.
American Express, for example, recently raised its Platinum Card annual fee to $895, citing “continued spending strength” among Gen Z and millennials — even though most of those same consumers can’t realistically afford it.
“It’s a striking contrast,” said Carlo Kobe, co-founder of the fintech Fizz, which helps college students build credit responsibly. “Starter products have become scarce, and the ones that exist are filled with high fees, sky-high interest rates, and confusing terms.”
That gap has opened the door for fintech startups to step in. Companies like Fizz, Step, and Deserve now offer cards without deposits and with automatic reporting to credit bureaus. Still, experts warn that without proper financial education, even these tools can turn into traps.
When a Parent’s Mistake Becomes the Child’s Burden
For some, the problem isn’t inexperience — it’s inheritance.
Gabriella Gooden, 23, knows that firsthand. In high school, her father added her as an authorized user on the family’s credit card to help her start building credit early. But when he lost his job during the pandemic and missed payments, her credit score plummeted too.
“My score dropped even though I hadn’t made any of those purchases,” she said. Now a Virginia Tech graduate living back home in New York’s Hudson Valley, she avoids applying for new cards altogether. Her score hovers around 600, a level that limits both housing and employment opportunities.
Gooden’s experience highlights a deeper flaw in the U.S. credit system: it often measures not just individual responsibility, but also intergenerational inequality. Young people from financially stable families start with an advantage, while those from less secure backgrounds face a cycle of exclusion that’s hard to escape.
Fear of the Unknown
Even among those eager to learn, the topic of credit remains intimidating. A recent USAA survey found that nearly half of Gen Z doesn’t fully understand what factors influence a credit score — and 62% avoid checking theirs out of anxiety.
“There’s a psychological component to this,” said Danziger. “Many young people associate credit with guilt, error, or debt. What’s missing is a positive narrative — one that frames credit as a tool for empowerment, not punishment.”
Rebuilding Trust, One Step at a Time
Despite the challenges, experts insist that building credit is still achievable — and it starts with simple, consistent actions. Paying bills on time, keeping balances low, avoiding frequent new applications, and regularly monitoring credit reports all help over time.
In recent years, new tools have emerged allowing consumers to report rent, utility, and streaming payments to credit bureaus — offering alternative ways to build credit without traditional cards.
“Credit scores reward consistency more than wealth,” Ward said.
“Small, intentional actions matter far more than big, occasional moves.”
A Future in Search of Confidence
In the end, Benson’s story found a modest resolution. Unable to sign a lease on his own due to a thin credit file, he finally secured an apartment in New York — thanks to a roommate’s parents who agreed to co-sign.
“People joke that Gen Z is bad with money,” he said. “But it’s not about irresponsibility. It feels like we’re being graded on a test with missing pages.”
Between credit algorithms, structural inequality, and increasingly selective financial institutions, a silent but critical struggle defines this generation: the need to prove they are trustworthy in a system that doesn’t trust them.
And that may be the real paradox of modern financial adulthood — wanting to build a future, only to discover that the system still prefers to bet on the past.
