The job market may determine if credit scores continue to decline in 2026
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Strong credit can be the key to great financial purchases and affordable loans, but some states saw significant declines that created a “perfect storm” for Americans’ wallets, according to credit repair experts.
On Thursday, WalletHub released its list of the states with the most credit crunch, and Micah Abigail LLC founder and social media influencer Micah Smith broke down what those top — and bottom — states said.
“What we’re seeing right now is a clear trend, especially when it comes to student loan payments, and it’s having a real impact on debt across the country. When payments started to resume, we actually saw a drop in the national average credit score. More than 4.5 million Americans were caught off guard,” Smith told Fox News Digital.
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“And from the point of view of credit experts, that’s where the real problem comes in. . . . When you combine high interest rates, no more free money in the economy and a student loan system that reports harshly and in ways that many consumers don’t understand, it created the perfect storm we’re seeing now in consumer loans.”
Couples seem to be stressing about credit reports, as scores are dropping across the country, according to a new report from WalletHub. (Getty Images)
1. Missouri
Missouri’s credit rating in Q3 2025 was 654, a decrease of 1.51% from last year. This marks the largest drop in average credit scores in all 50 states.
“It’s not random. There are real structural and policy factors at play,” Smith said.
WalletHub reports that Missouri’s payment system drives this data, with the average credit card debt at $2,622. The state also ranks 25th nationally in financial crisis.
2. In Georgia
Georgia’s credit rating dropped from 662 to 653, a dip of 1.36%. The state’s crime rate is above average, and missed payments are high, which WalletHub notes may have contributed to the decline.
“Georgia is a very important issue,” Smith said. “Georgia prohibits standard credit repair, and while that may sound like consumer protection on paper, in practice it often does the opposite. It limits access to education, advocacy and repair for consumers who don’t fully understand how credit reporting works.”
“Debt doesn’t fix itself. And if people don’t have legal support to navigate disputes, errors or even time for how accounts are reported, they tend to be stuck with bad credit for a long time – which lowers the overall rating for the entire state,” he added.
3. Delaware
Delaware residents saw a 1.2% drop in their average credit score, from 669 to 661. WalletHub reports that it is among the states that add the most debt, thus putting pressure on high scores and balances. Delaware also has the seventh highest rate of mortgage fraud in the US
On the other hand, states including Utah, North Dakota and Iowa saw the smallest declines at 0.14%, 0.15% and 0.28%, respectively.
“What you’re actually seeing in states like Utah, North Dakota and Iowa is that consumers tend to carry lower debt than the national average, and that’s really important,” Smith explained. “Typically, people who manage their credit card usage well are simply less risky on paper. They have a strong financial history, better spending habits and consistent payment behavior.”
“That consistency gives them a buffer. So when interest rates go up and minimum payments go up,” he added, “they’re in a better position to absorb that change without missing payments. A lower balance means lower stress when the environment tightens.”
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Poor credit scores are caused by not understanding how missed payments and delinquent debts affect scores, Smith added.
“There is an expectation of a quick recovery, and unfortunately, we are the ones who have to bear the bad news. The reality is that once you have missed payments, repayments and extended periods of default, debt recovery is a long road. There are no shortcuts – it requires consistency, patience and extended periods of default. [persistence] rebuilding the credit profile.”
Whether scores continue to decline in 2026 depends largely on the state of the job market.
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“We’re seeing people lose their jobs, and when income is disrupted, debt always follows. That means, if someone is disciplined and saved for a rainy day, they’re going to be in a much better position to withstand that kind of disruption,” Smith said. “I’m optimistic about everything, but patterns don’t lie. Credit goes in cycles.”
“If you don’t ask for help, and you keep things to yourself, you will never get better,” he continued. “Credit affects everything. It’s not a choice. Invest in learning about it, manage it intentionally and build timeless habits. Your credit is your financial fingerprint – it follows you, speaks for you, and tells a story whether you realize it or not.”
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