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Jobs market may determine if credit scores continue declining in 2026
Micah Abigail LLC founder and @fitcreditdoctor Micah Smith speaks to Fox News Digital about why she’s largely against the implementation of a 50-year mortgage rate.
A strong credit score can be the key to major financial purchases and affordable loans, but some states saw notable declines that created a “perfect storm” for Americans’ wallets, according to a credit repair expert.
On Thursday, WalletHub released its list of the states with the largest credit score decreases, and Micah Abigail LLC founder and social media influencer Micah Smith broke down what it means for those residents in the top – and bottom – states.
“What we’re seeing right now is a very clear trend, especially when it comes to missed student loan payments, and it’s having a real impact on credit across the country. Once payments resumed, we actually saw the national average credit score drop. Over 4.5 million Americans were caught off guard,” Smith told Fox News Digital.
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“And from a credit specialist’s perspective, this is where the real problem comes in. . . . When you combine higher interest rates, no more free money in the economy and a student loan system that reports harshly and in ways most consumers don’t understand, it created the perfect storm we’re seeing now in consumer credit.”
A couple looks stressed over credit reports, as scores dropped nationwide, according to a new WalletHub report. (Getty Images)
1. Missouri
Missouri’s average credit score in Q3 2025 was 654, a 1.51% decrease from the year prior. This marks the largest fall in average credit scores across all 50 states.
“It’s not random. There are very real structural and policy-driven factors at play,” Smith said.
WalletHub reports that Missouri’s payment behavior drives this data, with median credit card debt at $2,622. The state also ranks 25th nationally for financial distress.
2. Georgia
Georgia’s average credit score dropped from 662 to 653, a 1.36% dip. The state’s delinquency rate is above average, and missed payments are high, which WalletHub notes likely contributed to the decline.
“Georgia is a particularly important case study,” Smith said. “Georgia prohibits traditional credit repair, and while that may sound consumer-protective on paper, in practice it often does the opposite. It limits access to education, advocacy and remediation for consumers who don’t fully understand how credit reporting works.”
“Credit doesn’t fix itself. And when people don’t have lawful support navigating disputes, errors or even the timing of how accounts report, they tend to remain stuck with credit damage longer — which absolutely drags down statewide averages,” she added.
3. Delaware
Delaware residents saw a 1.2% decrease in their average credit score, going from 669 to 661. WalletHub reports that it is among the states adding the most debt, thus putting pressure on scores and higher balances. Delaware additionally has the seventh-highest debt delinquency rate in the U.S.
Conversely, 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 really matters,” Smith explained. “Generally speaking, people who manage their credit card utilization well are simply less risky on paper. They have stronger financial histories, better spending habits and more consistent payment behavior.”
“That consistency gives them a buffer. So when interest rates rise and minimum payments increase,” she added, “they’re better positioned to absorb that change without missing payments. Lower balances mean lower stress when the environment tightens.”
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Lower credit scores come down to a lack of understanding of how missed payments and prolonged debt actually impact a score, Smith added.
“There’s often an expectation of a quick recovery, and unfortunately, we’re the ones who have to be the bearers of bad news. The reality is that once you’ve had missed payments, charge-offs and extended periods of nonpayment, credit recovery is a long road. There are no shortcuts — it requires consistency, patience and [persistence] to rebuild the credit profile.”
Whether scores continue to decline in 2026 largely depends on the state of the job market.
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“We are seeing people lose jobs, and when income is disrupted, credit almost always follows. That said, if someone was disciplined and saved for a rainy day, they’re going to be in a much better position to weather that kind of disruption,” Smith said. “I am optimistic overall, but the patterns don’t lie. Credit is cyclical.”
“If you don’t ask for help, and you keep things to yourself, you’re never going to get better,” she continued. “Credit touches everything. It’s not optional. Invest in learning about it, manage it intentionally and build timeless habits. Your credit is your financial fingerprint — it follows you, it speaks for you, and it tells a story whether you realize it or not.”
