Gen Z's Credit Catch-22: How to Build a Score When Lenders Say No

Half of Gen Z says they can't get the credit they need. Here's why — and how young adults can start building a strong score early.

## The 'Chicken and Egg' Problem Facing Young Adults

Imagine you need a good credit history to get approved for a loan — but you can't build that history because lenders keep turning you down. That's exactly the frustrating loop millions of young people are stuck in today.

Credit is simply your ability to borrow money (like through a loan or credit card) with a promise to pay it back later. Your credit score is a number, usually between 300 and 850, that tells lenders how trustworthy you are at repaying debt. The higher the number, the easier it is to get loans at low cost.

A new TransUnion survey reveals a tough reality for Gen Z (people born roughly between 1997 and 2012):

98% say access to credit is important for their financial goals
Only 53% feel they actually have enough access to it
Their average credit score is 676 — that's 39 points below the U.S. average
14.4% of those aged 18–29 saw their scores drop 50+ points in one year, often due to student-loan troubles

Knowledge is also a problem. Nearly half of Gen Z doesn't fully understand what affects their score. For example, 53% wrongly believe that carrying a balance on their credit card (not paying it off fully each month) boosts their score. In reality, this just costs you extra in interest (the fee you pay for borrowing money).

This makes big milestones — buying a home or even a car (now averaging nearly $50,000 new) — feel out of reach, especially with high prices and elevated interest rates (the cost of borrowing being higher than usual).

The expert advice? Start early. "One of the biggest mistakes is just waiting too long to get started," says LendingTree analyst Matt Schulz. Building a track record of small, on-time payments now — even years before you need a mortgage — is the key to a strong score later. Parents with good credit can even add their children as authorized users to give them a head start.

Bottom line: You don't need to wait until you need a big loan to build credit. Start small, pay on time, and you'll break the cycle.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/gen-z-needs-to-build-credit-to-start-adulting-but-half-say-they-cant-get-it-heres-how-to-start-ef3e100c?mod=mw_rss_topstories