Collection Agencies NAICS 561440

Nov 5, 2025 - US Household Debt Reaches Record High

• US household debt reached a record high of $18.5 trillion in the third quarter of 2025, increasing about $197 billion from the previous quarter. Student‑loan debt rose to $1.65 trillion, with roughly 10 % at least 90 days delinquent, signaling ongoing repayment challenges for many borrowers. Credit‑card balances climbed to $1.23 trillion, up $24 billion in just the quarter and nearly 6 % higher than a year earlier, reflecting growing consumer spending and higher borrowing costs. Auto loans and other forms of consumer credit also contributed to the overall increase in household debt. Despite the record levels, the Federal Reserve Bank of New York notes that most household balance sheets remain relatively strong, though younger Americans and those carrying higher debt loads are showing signs of financial stress. Economists caution that continued interest-rate hikes and rising debt could pose challenges for households in the months ahead.
• Gen Z is experiencing the steepest decline in credit health, according to a new FICO report. The national average credit score fell two points in 2025 to 715, but Gen Z’s average dropped three points to 676, the largest year-over-year decline for any age group since 2020. Student debt is the primary driver: 34% of Gen Z consumers carry student loans, double the 17% rate among the general population. The end of the federal payment pause in October 2024 and the resumption of delinquency reporting has weighed heavily on scores. About 5.3 million borrowers are already in default, facing wage garnishment and tax refund seizures. Credit scores are critical in determining borrowing ability, meaning Gen Z could face higher costs for everything from credit cards to car loans. The report underscores the disproportionate financial strain younger borrowers face as repayment pressures mount.

• Credit card delinquencies fell slightly to 3.05% in the first quarter of 2025, according to the Federal Reserve Bank of St. Louis. While delinquencies seem to have plateaued, they remained at a 13-year high. Credit card delinquencies tend to be a six-to-nine-month early indicator of credit card charge-offs. Credit card charge-offs – when a credit card company writes off an unpaid loan as a loss and reports it to a credit agency – reached an 11-year high in the fourth quarter of 2024. Charge-offs in Q1 2025 also fell to 4.67%, down 2% from the previous quarter. Both delinquencies and charge-offs have declined for three straight quarters. As charge-off placements lag by 9-12 months, continued drops indicate less consumer stress and held debt.
• About 5 million student loan borrowers will have their outstanding balances sent to collection agencies by the Department of Education on May 5, potentially negatively affecting credit scores for millions. If a student loan borrower hasn’t made a payment in more than 270 days the loan is considered in default. When that happens with a federal student loan, the government can send it for collections, garnish wages, or take Social Security funds or income tax refunds. The situation dates back to President Biden pausing student loan payments for 12 months in 2023, and did not count late payments towards default. That moratorium ended in October 2024, and with the announcement of collections resuming under Trump, almost 9 million student loan borrowers will automatically be deemed delinquent in their payments. Delinquency can cost a borrower an average of 170 points on their credit rating, per the New York Federal Reserve.