America’s bad romance with credit is leading more and more frustrated borrowers to give up on personal goals.
A new survey from Zest AI found that more than half (53%) depend on credit for basic necessities. For Gen Z and Millennials, that number jumps to 3 in 4 (75%).
But nearly two-thirds see the system as unfair, and more than a quarter had more trouble accessing credit this year than in 2024.
The report highlights the economic turmoil of the last few years, noting that 65% of respondents reported using credit more in the last year, up drastically from 25% in 2020.
As Americans’ debt is increasing, their ability to save for major life milestones is taking a hit. Gen Z is increasingly turning away from pricey higher education; Millennials are reporting that they’re not sure they’ll ever get out of debt.
Unsurprisingly, their homeownership goals are being impacted, too. Nineteen percent of respondents have given up the idea of buying a home altogether.
That’s compared to 23% giving up on improving their credit score, and 17% believing they won’t be able to contribute to their retirement savings or retire when they expect to.
“What we’re seeing in our research reflects a broader economic reality–Americans are telling us that the rising costs of essentials like housing, healthcare, and food are simply outpacing their income growth,” said Mike de Vere, CEO of Zest AI.
“This isn’t a budgeting problem; it’s a structural economic challenge that’s making it genuinely harder for Mainstreet Americans to build financial stability. As one respondent put it, ‘the system feels stacked against everyday people.’”
For potential homebuyers, credit card debt can mean the difference between affordability and being locked out of the market.
Borrowers’ debt-to-income ratio can prevent them from qualifying for a low mortgage rate– or qualifying at all.
The difference between a 6.5 percent and 7 percent rate means $107 dollars a month on a $400,000 mortgage, according to Bankrate.
Hardworking families feel that their debts shouldn’t be the end-all, be-all of their homebuying journey. The report noted that 60% of Americans support the idea of mortgage lenders using alternative credit scoring models, not just FICO and VantageScore.
Credit debt can also be a problem after securing a mortgage. Homeowners struggling to make monthly payments who take a hit to their credit score can be blocked from tapping their equity, making them wealth-negative despite their investment.
