FICO to factor BNPL into credit scores this fall

In recognition of the increased use of Buy Now Pay Later (BNPL) programs by American consumers, FICO is launching a version of its credit scores that takes into account BNPL activity. The new credit scores are expected to be available in the fall of 2025. For individuals who struggle to qualify for traditional credit, factoring in BNPL transactions could be a way of building a credit history. Inclusion of those transactions will depend on whether the BNPL lender reports activity to the credit bureaus. The credit history will record BNPL and may be positive or negative depending on whether consumers pay on time. However, not all credit scores will include BNPL transactions. See article at Yahoo.com.

Mixed credit results for consumers in May 2025

The latest TransUnion Credit Industry Snapshot revealed both positive and negative trends for consumers in May. Average balances owed increased for credit cards and mortgages, but decreased for unsecured personal loans. Rates of serious delinquencies on payments rose for auto and unsecured personal loans, but declined for credit cards and mortgages. However, the falling rates of seriously delinquent accounts for credit cards and mortgages might prove short-lived. Serious delinquency rates for these forms of credit refer to those that are 90 days or more overdue. While those rates dropped in May, shorter-term delinquency rates rose for both credit cards and mortgages. That means more consumers with those forms of debt have fallen behind recently. See details at TransUnion.com.

Consumer confidence drops sharply in June 2025

The Conference Board’s Consumer Confidence Index fell by 5.5% in June. This erased roughly half of the progress made in May, leaving the Index substantially down for the first half of 2025. The component of the Index that measures current business and labor market conditions fell by 4.7% during June. The Expectations Index, which measures the economic outlook consumers have for the near future, fell by nearly 6.3%. This left the Expectations Index well down into a range that has traditionally been associated with recessions. Tariffs and inflation continue to be issues that weigh most heavily on people’s minds. See news release at Conference-Board.org.

Existing home sales sluggish in May 2025

The National Association of Realtors reported that sales of existing homes rose at a seasonally-adjusted pace of just 0.8% in May. Year-over-year, sales of existing homes declined by 0.7%. The sluggish pace of sales led to a 6.2% increase in unsold inventory on the market. That inventory now represents 4.6 months’ worth of supply. Different regions of the country experienced differing trends in existing home sales. For May, sales volume increased in the Northeast, Midwest, and South, while it decreased in the West. Year-over-year, sales increased in the Northeast and Midwest, while they declined in the South and West. See details at NAR.Realtor.

Home price growth cools in April 2025

The latest release of the S&P CoreLogic Case-Shiller U.S. National Home Price shows that home prices continued to grow in April, though at a slower pace than the previous month. The Index rose by 0.61% in April, compared with 0.77% in March. Year-over-year, national home prices are up by 2.72%. See home price data at SPGlobal.com.

2025 Q1 GDP drop deeper than first reported

The final estimate for the first quarter of 2025 Gross Domestic Product (GDP) showed that the economy’s decline during the quarter was worse than previously thought. The change in GDP was revised downward from -0.2% to -0.5%. The figures are reported at an annual pace and after seasonal adjustment. The decline in GDP during the first quarter indicates an abrupt slowdown in the economy, following a 2.4% annual growth rate in real GDP in the fourth quarter of 2024. It’s too early to tell whether this decline is just a temporary blip or a sign of the beginning of a recession. See GDP report at BEA.gov.

Mortgage rates dip for fourth straight week

30-year mortgage rates fell by 0.04%, to reach 6.77%. This was the fourth consecutive week in which mortgage rates have fallen, though in each case the moves have been slight. 30-year mortgage rates fell by a total of 0.12% in June. 15-year mortgage rates have also fallen for four weeks in a row. The decline in 15-year rates has totaled 0.14%, leaving them at 5.89%.

Personal income and spending declined in May

US personal income fell by $109.6 billion in May, a 0.4% decline. This is an ominous sign for the U.S. economy. With personal income falling, consumers began to rein in their spending. Personal consumption expenditures fell by 0.1% during May. Cuts to government benefit payments and loss of income by farm proprietors were cited as leading reasons for the decline in personal income. See report at BEA.gov.

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Building strong financial habits is always a good idea. But when it comes to your credit score, not every smart move counts. In fact, many habits that help you feel financially secure have no effect on your credit file at all.

That does not mean they are worthless. These habits can help you avoid financial stress, stay on track with bills, and build long-term stability. However, credit scores are based only on specific types of credit activity, so many of your everyday financial choices are not reflected.

1. Budgeting and tracking your spending

Keeping a budget helps you manage your income, reduce unnecessary expenses, and plan ahead. But your credit score does not measure how well you manage your cash flow or how closely you stick to a budget.

Even so, consistent budgeting can make it easier to stay on top of bills and avoid financial strain. It does not directly affect your score, but it may help support other habits that do.

2. Building a savings cushion

Having emergency savings is one of the most important things you can do for your financial health. However, your savings account balance is not included in any credit score calculation.

Saving money does not directly affect your score, even if it gives you more financial flexibility. It may help you avoid missed payments or the need to borrow, but the act of saving itself is not part of your credit profile.

3. Using debit cards or cash

Spending with debit or cash may help you avoid overspending or interest charges, but it does not create any credit history. Debit card use is not reported to credit bureaus, and neither is cash spending.

If you rely only on non-credit tools to manage your money, your credit report may remain thin or inactive. These habits can support financial control, but they will not build or improve your credit score unless you use a service like Sesame Cash. By enrolling in Sesame Credit Builder, members can build credit by making debit purchases that are reported as on-time payments to help establish credit history.

4. Investing for retirement

Contributing to a retirement account like a 401(k) or IRA is a smart long-term move, but it does not affect your credit score. These accounts are not loans or credit products; credit scoring models do not consider your investments or account balances.

Even with a strong portfolio, your score will not change. Retirement savings build financial security, but are not part of your credit profile.

5. Avoiding all debt entirely

Some people take pride in never borrowing, which can be a responsible lifestyle. But in the eyes of credit scoring systems, no credit history means no credit score.

If you avoid all loans and credit cards, you may find it challenging to qualify for credit if you ever need it. You may prefer to live debt-free, but remember that credit activity is required to build a credit file.

6. Couponing and comparison shopping

Clipping coupons, price checking, and planning your purchases are smart ways to stretch your money. But none of these habits are connected to your credit report.

These strategies may help you spend less or save more, but they do not directly affect your credit score.

7. Saving for large purchases

Setting aside money for big expenses like travel, appliances, or home repairs may be a smart way to avoid debt. Paying from savings can be satisfying and help you stay financially grounded.

But saving enough to buy a car or a home outright may take years. In some cases, it may not be realistic at all. Strong credit can be the key to moving forward without added financial strain.

Integrating good credit behavior into your money management habits

Strong money management habits like saving, budgeting, and paying bills on time help you stay financially stable. But if you are not using credit accounts, these habits typically do not affect your credit score.

There are limited exceptions. Rent and utility payments are usually not reported to credit bureaus unless they become seriously overdue. Some third-party services, such as Experian Boost or Credit Sesame’s rent reporting feature, may allow certain payments to appear on your credit file. These services are optional and apply only to specific credit scoring models.

Once you begin using credit cards, loans, or other types of borrowing, credit behavior becomes part of your overall financial strategy. At that point, habits like paying on time, keeping balances low, and managing accounts responsibly are just as important as saving and budgeting.

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June’s Fed meeting came and went without any change in the Federal funds rate. The decision reflects a growing problem: the economic indicators the Fed relies on are increasingly pointing in opposite directions.

Slowing economic growth and rising unemployment typically call for lower rates, but renewed inflation concerns are pulling the other way. This tug-of-war is leaving 2025 interest rates in limbo.

The Fed expects economic signals to move further apart

After the Federal Open Market Committee met on June 17 and 18, it released updated projections showing greater conflict between key economic indicators.

On one side, the Fed lowered its expectations for GDP growth and raised its unemployment forecast. That indicates it expects the economy to weaken more than previously thought.

At the same time, it raised projections for inflation in 2025 and the two years that follow. That means it sees price pressures remaining higher than hoped.

The Fed tries to balance two main goals: encouraging employment and limiting inflation. Lower interest rates can support job growth, while higher rates are often used to control inflation. Because those two responses are at odds with each other, tension between the Fed’s goals is not new. But now that tension appears to be growing.

Interest rates remain unchanged

At the end of its June meeting, the Fed announced it was holding the Federal funds rate steady at a target range of 4.25% to 4.5%.

This decision disappointed some, including President Trump, who has repeatedly called for cuts. However, Fed Chair Jerome Powell does not act alone. The rate-setting committee voted unanimously to leave rates unchanged, reflecting broad agreement that the economic situation does not support a move right now.

As recently as September, the Fed expected to lower rates to 3.4% by the end of this year. Instead, its latest projection shows a year-end rate of 3.9%, which is half a percentage point higher. It has also raised its rate expectations for 2026 and 2027.

Inflation uncertainty continues to weigh heavily on rate decisions. The Fed is not raising rates at this point, but it does not believe conditions justify lowering them either.

Inflation concerns have not gone away

One reason the Fed is drawing criticism for holding off on rate cuts is that inflation has remained relatively calm in recent months. Inflation remained calm with modest monthly price increases through much of 2024.

However, the Fed bases its decisions on where the economy is going, not just where it is now. Tariffs that have been announced are not yet fully reflected in prices. There are delays between when tariffs take effect and when their impact reaches consumers. Retailers often have existing stock to sell through first.

On top of that, ongoing conflict in the Middle East creates the possibility of rising oil prices, which can drive up costs across many sectors.

The Fed also considers how inflation can build on itself. Higher import prices can lead to domestic price increases. Companies may raise prices due to rising input costs, and employees may push for higher wages in response. This feedback loop can create lasting inflation that is harder to reverse.

To provide some perspective, the current rate is lower than the historical average. Over the past 50 years, the Federal funds rate has averaged 4.69%. Today, it sits at 4.33%.

Since August of last year, the Fed has lowered rates by a full percentage point, from 5.33% to 4.33%. So while it has not made deep or frequent cuts in 2025, it has already moved rates below the long-term norm.

The criticism is not that the Fed has done nothing. It is that it has not gone as far as some would prefer.

Consumer interest rates often move independently

From a consumer perspective, the Fed’s decisions may not matter as much as headlines suggest. Even when the Fed does cut rates, the impact on what consumers actually pay can be small.

For example, between mid-2019 and early 2020, the Fed cut rates by 2.25%. During that same period, the average interest rate on credit card balances dropped by only 0.53%.

In the second half of last year, the Fed cut rates by 1.0%, but 30-year mortgage rates fell by just 0.01%.

That is because consumer rates do not track the Federal funds rate exactly. Both are influenced by broader market factors, including credit risk and inflation expectations.

As the economy slows, lenders tend to raise rates to account for higher risk, especially on unsecured debt like credit cards. For borrowers with lower credit scores, those increases can be even steeper. Credit conditions may tighten, making it more difficult or expensive for some consumers to access credit at all.

Meanwhile, long-term mortgage rates are often more sensitive to inflation expectations than to short-term interest rate moves.

Broader changes are needed for real consumer relief

The Fed’s projections suggest that concerns about inflation are growing while the economic outlook is weakening. That is a difficult environment for lowering interest rates.

To see meaningful improvement in borrowing costs, several things would need to happen. A stronger economy could reduce credit risk. A shift in trade policy or global tensions could ease inflation pressure.

Until those conditions change, the Fed may have limited ability to affect consumer borrowing costs. The bigger issue is not whether the Fed chooses to cut rates. It is whether the economy provides the conditions that allow those cuts to make a difference.

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Retail sales took a hit in May 2025

U.S. retail sales suffered a bigger drop than was expected in May. Retail sales fell by 0.9% during the month, more than the expected decline of 0.6%. Year-over-year, retail sales were up by 3.3%, a substantial slowdown from the 5% gain through April. In part, the sharp drop in retail activity in May was a recoil from unusually strong activity the prior month. In April, consumers had rushed to buy big-ticket items such as vehicles to get ahead of new tariffs. Notably, auto sales declined by 3.5% in May. See article at MSN.com.

Fed dampens expectations for rate cuts again

The Fed entered 2025 expecting to make multiple rate cuts during the year. However, after its recently completed meeting, the Fed announced that it still isn’t ready to make its first rate cut of 2025. The Fed’s rate target remains 4.25% to 4.5%. Besides holding off on cutting rates, the Fed has also reduced its projections for future rate cuts. While the Fed still expects to cut rates by half a percent this year, its rate targets for 2026 and 2027 are not as low as previously. Last September, the Fed issued projections showing that it expected the Fed funds rate to drop to 3.4% in 2025, 2.9% the following year and remain at 2.9% in 2027. Those targets have since been elevated to 3.9% for this year, 3.6% for next year and 3.4% for 2027. See Federal Open Market Committee Statement at FederalReserve.gov.

Tariff fears eroded household wealth in Q1 2025

U.S. households and nonprofit organizations lost a combined $1.6 trillion in the first quarter of 2025. The loss of wealth was caused by the stock market’s decline due to concern over the impact of tariffs. Meanwhile, household debt rose by 1.9% during the quarter. See article at Reuters.com.

U.S. workforce faces labor shortage

The U.S. needs to add an average of at least 4.6 million workers a year between now and 2033 to maintain a workforce sufficient to meet the country’s needs. This is according to a new report by the Committee for Economic Development (CED), which is the public policy center of the Conference Board. The CED warns that policy changes to expand the labor force are needed to avoid a shortage of workers in the years to come. Policy changes it recommends include reforms to the Social Security earnings test, gearing immigration rules towards admitting qualified workers, encouraging flexible work arrangements and making childcare more readily available. See news release at Conference-Board.org.

First-time buyers now spend nearly 60% of income on mortgages

A new study from the JPMorgan Chase Institute shows that mortgage payments are now taking up 45 percent more of household budgets than they did in 2019. Home prices have increased by 50 percent over the same period, and mortgage rates have also risen. Both factors are pushing up monthly costs. For people aged 25 to 44, who make up most first-time homebuyers, a typical mortgage payment used to take up 40 percent of their disposable income. By 2024, that had increased to 57.5 percent. See article at Realtor.com.

Government agencies team up to fight fraud

Various federal banking agencies issued a joint announcement of intentions to coordinate efforts to fight fraud. The statement was issued by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve. Besides the cooperation on the federal level, the statement signaled an intent to work with state regulatory agencies. A particular area of emphasis is check fraud, which has soared in recent years. See article at PaymentsDive.com.

Budget cuts affect collection of economic data

Citing a lack of resources, the U.S. Bureau of Labor Statistics (BLS) announced that it was cutting back on the data collection efforts that go into calculating the Consumer Price Index (CPI). The CPI is the most widely followed measure of U.S. price inflation. The data affects financial markets, cost-of-living adjustments and economic policy decisions. The BLS explained that it is reducing sample collection efforts, including suspending data collection in some cities. See announcement at BLS.gov.

Sales of new homes slowed sharply in May

Applications for mortgages to buy newly-built homes dropped 9% in May compared with the previous month. Completed sales of new, single-family homes suffered an even steeper drop, falling by a seasonally-adjusted 12.1% in May. The drop-off in May reverses a large jump in new home sales in April, and is more in line with the level of activity seen earlier in the year. Mortgage rates rose sharply in mid-April. This, along with a significant level of economic uncertainty and a growing inventory of existing homes for sale, is thought to have contributed to the sharp decline in new home sales in May. See commentary at MBA.org.

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Credit scores can influence everything from the interest you pay on a loan to the credit cards you can qualify for. But not all strong scores are equal. A score that’s considered good may get you approved, but a great score could get you better terms, more offers, and lower long-term costs. That gap can have a big impact on your financial future.

Credit scores by the numbers

Most lenders rely on either the VantageScore or the FICO Score to assess creditworthiness. Both use a scale from 300 to 850 and draw on similar credit report data, but the way they classify scores differs slightly.

Although people often talk about a single credit score, everyone actually has many. You may have a FICO Score 8, a VantageScore 3.0, and several industry-specific scores, such as versions used for auto lending or credit card applications. Each score is calculated using the same core credit data, but different models or lenders may weigh certain factors more heavily. This is why your score might vary slightly depending on where you check it. There is some overlap, and many models consider scores in the mid-600s to low 700s as good, and scores above roughly 740 as great or excellent.

What a good credit score can offer

If your credit score falls in the good range, you’re likely to qualify for a wide variety of loans and credit cards. You may be approved for a mortgage, get an auto loan with a reasonable rate, or open a credit card with moderate rewards.

The catch is that you may not get the best terms. Lenders use risk-based pricing, which means you might face higher interest rates or fees than someone with excellent credit, even if you both qualify for the same product.

Good credit shows that you’re responsible with debt, but lenders may still view you as a moderate risk. That uncertainty can translate into slightly stricter lending conditions.

Why a great credit score makes a difference

When your score reaches the great (very good, excellent or exceptional) range, the benefits tend to become more noticeable. Lenders see you as a low-risk borrower. That means you may be offered:

• Lower interest rates
• Higher credit limits
• Faster loan approvals
• Access to top-tier credit cards and rewards programs
• Better terms on refinancing or balance transfers

Over time, these advantages can add up. According to the Consumer Financial Protection Bureau, credit score is one of seven factors determining the interest rate you are offered on a mortgage.

What separates good from great

Great credit takes more than just avoiding mistakes. It reflects long-term, consistent financial behavior. If you already have a good score, moving up typically means refining your habits rather than overhauling them.

Several key differences tend to separate the two categories:

• Credit utilization is typically lower. Many borrowers with excellent credit use less than 10 percent of their available credit.
• Credit history is longer. Lenders like to see that you’ve managed credit responsibly over many years.
• Accounts are older and well-maintained. Keeping long-standing accounts open contributes to score strength.
• New credit applications are limited. Applying for multiple accounts in a short time can reduce your score temporarily.
• There’s a solid mix of credit types. A combination of revolving credit (like credit cards) and installment loans (like car loans or mortgages) can be a plus.

For a full breakdown of how credit score factors work, see Credit Sesame’s guide to what affects your credit score at https://www.creditsesame.com/learn/credit-score/what-affects-your-credit-score/.

Moving from good to great

If your score is already in the good range, reaching great credit status may be a matter of consistency. Paying on time every month is essential, but it’s also worth paying attention to the details.

Start by reviewing your credit reports for accuracy. A single incorrect late payment could be holding your score back. Then look at your reported credit utilization. Even if you pay your balance in full, your issuer might report a high balance at the wrong time. Paying down balances before the statement closing date can help.

If your credit history is fairly new, time will help — as long as you keep accounts open and active. Avoid unnecessary hard inquiries, and consider using a tool that lets you get credit for nontraditional payments like rent or utilities.

Monitoring your credit over time is one of the most effective ways to stay on track. A free credit monitoring tool can help you follow your progress and spot issues early.

Why the extra effort is worth it

A good credit score is a strong start. But a great score can offer more options, better pricing, and long-term savings. Whether you’re borrowing for a home, financing a car, or simply trying to qualify for a high-rewards credit card, the difference between good and great may determine how much you pay or how far your money goes.

Building excellent credit doesn’t require perfection. It does require attention, patience, and the willingness to stay consistent even when the results take time. But for many people, the payoff can be well worth it.

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Being in control of your finances, regardless of your income level, may help ward off negative mental health symptoms such as depression and anxiety. That is one conclusion suggested by a new study led by a professor at Johns Hopkins University.

The study, published in the American Journal of Epidemiology, found a correlation between higher credit scores at the ZIP code level and lower rates of depression and anxiety symptoms among residents in those areas. In other words, people living in areas with stronger average credit scores were less likely to report those symptoms.

There is no magic formula to fix your credit or your mental health. However, what they have in common is that understanding the problem and working on ways to address it can go a long way toward making you feel more in charge of the situation.

How the survey was conducted

The study was based on mental health survey data from more than half a million adults in Pennsylvania. Key to the study were two questions from the Carnegie Mellon University COVID-19 Trends and Impact Survey, conducted in partnership with Facebook:

• In the past five days, how often have you felt depressed?
• In the past five days, how often have you felt nervous, anxious, or on edge?

Researchers matched responses to these questions with the average credit scores of the respondents’ ZIP codes. This showed that people in higher-credit-score ZIP codes generally reported fewer symptoms of depression or anxiety than those in areas with lower scores.

An average of 10.9% of adults in high-credit-score areas reported symptoms of depression, compared with 13.7% in lower-score areas. Similarly, an average of 14.9% of adults in high-score areas reported anxiety, compared with 17.4% in lower-score areas.

Of course, there are many factors besides credit conditions that can contribute to mental health struggles. Notably, people living in high-credit-score areas still reported symptoms of anxiety and depression. However, the numbers suggest that when financial pressures are reduced, it may help improve overall well-being.

Living within your means appears to be key to happiness

While it is true that higher-credit-score ZIP codes tend to be wealthier, the study adjusted for ZIP-code-level income, unemployment, education, and other factors. The pattern linking credit score and mental health remained even after those adjustments.

This is important because it is possible to maintain a good credit score despite having a modest income.

A Credit Sesame survey found that people with higher incomes tended to have higher credit scores than those with lower incomes. Undoubtedly, making more money makes making ends meet and paying on time more manageable.

Significantly, even among people making less than $50,000 a year, there were more people with good to excellent credit than with poor or fair credit. The takeaway is that you do not have to let your income define how you manage your finances – or your happiness.

The chicken-egg relationship

Looking at the results of the new study does bring up questions about the nature of the relationship between credit and mental health. It boils down to a chicken-or-egg question: which comes first, credit challenges or symptoms of anxiety and depression?

Credit difficulties may lead to feelings of stress or helplessness. At the same time, mental health struggles can make it harder to stay on top of financial responsibilities. It may be that credit issues and mental health concerns reinforce one another, making it especially important to address both when possible.

Taking control of your credit history can be empowering

If you frequently experience anxiety or depression, it is important to consider seeking help from a qualified mental health professional. Support can benefit many areas of life, including your financial situation.

At the same time, if you have credit challenges, taking steps to address them may help you feel more empowered and less overwhelmed.

It may take time to see results. But even just having a plan and working on it can give you a greater sense of control over your financial life, which might contribute to a better sense of well-being.

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Consumer inflation slows to 0.1% in May 2025

The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose by just 0.1% in May. That’s less than April’s 0.2% rise, and projects to a slower annual pace of inflation than the 2.4% rise in the CPI over the past 12 months. The core inflation rate, which excludes food and energy, was also 0.1% for May. The core rate is a little higher than the overall rate for the past 12 months, at 2.8%. The overall rate was kept lower by a 12% drop in the price of gasoline over the past year. See news release at BLS.gov.

Producer prices edge higher after two-month decline

The Producer Price Index (PPI) rose by 0.1% in May. Though that’s a mild increase, it represents a rise in the pace of producer inflation after the PPI declined in each of the two previous months. Prices for both goods and services both rose at the same 0.1% rate in May. Producer prices tend to vary more month-to-month than consumer prices, but eventually inflationary trends in producer prices tend to filter through to consumers. See news release at BLS.gov.

Tariff concerns lead businesses to pause spending and hiring

A survey by Provident Bank found that 70% of US business owners are “very” or “moderately” concerned about the impact of tariffs on their businesses. 42% said they plan to delay major capital spending, and 30% said they have stopped hiring. Overall, 55% of US business owners feel tariffs will hurt the economy. Despite all these concerns, 60% of business owners believe the economy will grow over the next six months. See article at BankingJournal.ABA.com.

Consumer outlook improves as inflation fears ease

The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations found that people’s financial outlook improved on a few fronts in May. The average inflation expectation for the year ahead dropped by 0.4%, to 3.2%. The perceived probability of losing one’s job sometime during the next year fell by 0.5%, to 14.8%. Household income is expected to grow by 2.7% over the next 12 months, up from 0.1% from the expectation in April. Debt fears calmed a bit, as the median probability of missing a debt payment over the next three months dropped by 0.5%, to 13.4%. Finally, spending is expected to grow by 5.0% over the year ahead. That is 0.2% less than expected in April, though it still exceeds the average of 4.9% over the past year, which means households would be raising spending faster than incomes and inflation. See summary at Federal Reserve Bank of New York.

Study links higher credit scores to better mental health

A study led by a Johns Hopkins professor found that people living in areas with higher credit scores are more likely to be mentally healthy. People who live in areas with excellent average credit scores had a 10.9% chance of showing signs of depression. For people in areas with mediocre credit scores, the depression rate rose to 13.7%. 14.9% of people in excellent credit areas reported feeling anxiety. In regions with mediocre credit scores, the rate of anxiety was 17.4%. The relationship between higher credit scores and better mental health was observed even after adjusting for income and demographic factors. See article at PublicHealth.JHU.edu.

Consumer credit use rebounds in April, led by credit cards

The Federal Reserve’s monthly report on consumer credit found that borrowing accelerated in April. Consumers had reined in borrowing during the first three months of the year, but their use of credit grew at an annual pace of 4.3% in April. It had averaged a pace of 1.3% during the first quarter. April also showed the return of a preference for revolving debt. This debt, mostly credit card balances, grew at a 7% annual rate in April, compared with a 3.3% rate for loan debt. This is concerning because revolving debt is generally more expensive than nonrevolving debt. All figures are adjusted for normal seasonal differences, so the arrival of Spring doesn’t account for the revival of borrowing. See consumer credit data at FederalReserve.gov.

Mortgage rates remain stable for ninth consecutive week

30-year mortgage rates eased by 0.1% last week, to 6.84%. 15-year rates fell by 0.2%, to 5.97%. The minimal change continues a streak of nine weeks in which 30-year rates have remained in a tight range of 6.76% to 6.89%. 30-year rates are now one basis point lower than when the year began, and 0.76% higher than the low point reached at the end of last September. See mortgage rate details at FreddieMac.com.

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Increased financial stress for households

The U.S. job market is showing signs of strain. In May 2025, the Bureau of Labor Statistics (BLS) reported that the economy added 139,000 jobs, a drop from the previous month and well below the monthly average gain for the past year. Earlier estimates for March and April were also revised downward, suggesting a broader slowdown in employment growth.

Not everyone will feel the effects of a slowing job market, but it can lead to longer job searches, more competition, and slower wage growth in some industries. These changes may create challenges for some households trying to maintain financial stability.

Does reduced income affect your credit score?

Nothing happens to your credit score as a direct result of reduced income. However, income disruption, whether temporary or long-term, can lead to financial strain. For some, that may make it more difficult to stay current on payments, particularly on credit cards, loans, or other recurring obligations. Late payments are commonly reported to credit bureaus and may negatively impact credit scores.

Others may continue making payments but rely more heavily on credit to cover expenses. That can increase their credit utilization ratio, which may also influence credit scores. Even individuals who stay current on bills could see changes to their score if balances grow significantly or if lenders reduce available credit in response to economic conditions.

Remember that missed payments are one of the most common causes of credit score damage. Managing your budget carefully and making at least the minimum payments on time can help you avoid negative marks like delinquencies or collections.

Protect your credit in an uncertain job market

No one can fully predict how the economy will evolve or how it may affect your credit, but it is always wise to adopt good personal finance and credit management practices.

• Consider building or rebuilding an emergency fund. Having savings to cover a few months of essential expenses can reduce reliance on credit during income disruptions.
• Try to make at least the minimum payments on all accounts. Maintaining a positive payment history is one of the most important factors in credit health.
• Communicate with creditors early if financial strain is expected. Some lenders offer hardship options that could temporarily pause payments or reduce fees.
• Monitor your credit regularly. This may alert you to changes in your credit report or score, giving you time to respond.

Stay alert to economic changes

Economic shifts can affect credit indirectly. If interest rates change or lending standards tighten, consumers may find it harder to access new credit or secure favorable terms. Tracking trends in your own industry or region may also help you plan ahead, especially if layoffs become more common.

Resources like the Federal Reserve Bank of New York’s Survey of Consumer Expectations offer helpful insight into how people view the job market and inflation outlook.

Some households may be eligible for support through state or federal programs if the employment outlook worsens. Being aware of those options in advance could help reduce stress and avoid late payments in the event of sudden changes. If you are experiencing financial strain, these federal resources may help:

• Hardship help for mortgages and rent
  The Consumer Financial Protection Bureau provides guidance on forbearance, rental assistance, and how to talk to your loan servicer.
• Unemployment benefits
  If you lose your job or have your hours significantly reduced, you may qualify for state-administered unemployment benefits.
• Job training and reemployment support
  The Department of Labor’s CareerOneStop site connects people to local training, career counseling, and job search help.

How good credit habits can help when the job market slows

Credit scores reflect many aspects of financial behavior, including how consistently payments are made and how much credit is being used. The broader economy plays a role in shaping opportunities and risks, but strong personal habits can help you maintain stable credit even during difficult periods.

A slowing job market might bring added pressure, but it does not automatically lead to credit problems. A proactive approach to managing your personal finances through budgeting, planning, and regular credit monitoring can help avert any negative impact and ensure you stay in control of financial outcomes.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

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Confidence among America’s chief executive officers (CEOs) has just experienced its steepest drop since 1976, according to a new survey.

When concern rises at the top, it often trickles down. If business leaders are bracing for trouble, it may be time to prepare yourself. The good news is that a few smart steps now could put you in a much stronger financial position.

Survey shows a drastic drop in CEO confidence across the U.S.

The Conference Board is a nonpartisan, nonprofit organization that analyzes business conditions and provides insight to executives. As part of this effort, they keep a finger on the pulse of business leaders with regular surveys of chief executive officers.

A May 2025 survey found that CEOs have become more concerned about the economy in recent months. In fact, the decline since the previous quarter was the largest in the survey’s history, which dates back to 1976.

How worried are America’s business leaders? Here are some signs that concern is rising:

• 82% of CEOs said economic conditions had worsened over the past six months, compared to just 2% who said they had improved.
• 69% said conditions in their industry had deteriorated, compared to 7% who reported improvement.
• 64% expect economic conditions to decline further over the next six months, while only 18% expect improvement.

How bad could things get? 83% of CEOs expect a recession in the next 12 to 18 months. That is up from just 30% late last year.

What is driving these concerns? The top three issues cited were:

• Geopolitical instability
• Trade and tariffs
• Legal and regulatory uncertainty

Overall, economic concern among business leaders is rising quickly, and that level of caution could influence broader decisions affecting jobs, wages, and investment.

How CEO pessimism can affect the workforce

CEO concerns are not always accurate predictions, but they often shape real decisions that affect employees. When executive confidence falls, it can ripple through hiring, pay, and investment plans.

Here are some examples of how CEO pessimism might affect the workforce:

• Slower hiring. One of the first things that happens when leadership faces uncertainty is a delay or cancellation of hiring plans. This may already be happening, as job growth has been sluggish so far in 2025.
• Wage increases become stingier. As demand for workers eases and budgets tighten, companies feel less need to pay up to retain employees. Your next raise may be harder to come by.
• Employee perks are trimmed. One way to cut employment costs without the morale hit of reducing pay is to eliminate some employee perks. Everything from the company picnic to 401(k) matching contributions could be affected.
• Investment slows. R&D, new plant and equipment, and ad campaigns are all expenses that do not pay off immediately. CEOs may become more hesitant to invest in the future during periods of economic uncertainty.
• Layoffs start. Once demand slows, companies may look to reduce headcount to protect the bottom line.

To some extent, CEO pessimism can become a self-fulfilling prophecy. When companies reduce spending and cut jobs, it can weaken the broader economy.

How to protect yourself in an uncertain economy

When your company’s head is worried about the economy, it can affect you in several ways. In response, here are some things you can do to get ready:

• Build a little cushion into your budget. Whether it’s a smaller bonus, having your hours cut or even losing your job, economic concerns could affect your take-home pay. This would be a good time to take a look at your budget to see which costs you can reduce or eliminate.
• Rein in borrowing. If you’ve been borrowing regularly to make ends meet, it would be wise to break that habit. If the economy worsens, look for lending standards to tighten. It might become harder to get new credit, and existing credit limits might even be cut.
• Raise emergency savings. If you don’t have one, this would be a good time to start an emergency fund. If you already have one, this might be a good time to build it up. If the job market weakens, more people may lose work, and it may take longer to find a new job. A larger emergency fund could help you stay afloat.
• Work on your credit score. This could help you retain access to credit even if the economy weakens.
• Update your job skills. Look for ways to increase your value to your employer. That may keep you off any layoff list. It would also make you a more attractive candidate if you have to find a new job.

Taking steps to prepare for a rough economy may not change what executives do next, but it could make a real difference in how well you weather it. Building financial stability now can help you feel more secure, even if the road ahead is uncertain.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

The post What falling CEO confidence may mean for your job, budget and credit appeared first on Credit Sesame.

Job growth slowed in May 2025

The Bureau of Labor Statistics reported that the US economy added 139,000 jobs in May. That marked a decline in employment growth from the 147,000 jobs added in April and from the monthly average of 149,000 over the past 12 months. In other signs of weakness for the job market, the estimates for employment growth in March and April were both revised down by significant amounts. Job growth in April was initially announced as 177,000 but has been revised downward by 30,000 to 147,000. Job growth for March was initially announced as 228,000. It was first revised downward by 43,000 to 185,000, and now has been revised downward again by another 65,000 to 120,000. In other words, job growth for March now seems to have been 108,000 lower than initially announced. See jobs report at BLS.gov.

Consumers hit the brakes on spending growth

The growth rate of consumer spending slowed drastically in April 2025. According to the latest report on Personal Income and Outlays from the Bureau of Economic Analysis, personal spending grew by just 0.2% during the month. This represents a sharp slowing from a 0.7% growth rate in March. Spending on services grew by 0.4% during April, but spending on goods declined by 0.1%. See report at BEA.gov.

Uncertainty weighs on economic growth

The latest Federal Reserve report on economic activity around the US showed that half of the 12 districts reporting to the Fed showed declines in economic activity since April 2025. Besides the six districts reporting less activity, three showed no change and three showed slight growth. The report found elevated levels of economic and policy uncertainty coming from businesses and households in all districts. This uncertainty has created greater caution in business and household financial decisions. See article at ABA.com.

US and global economies expected to slow

The Organization for Economic Cooperation and Development (OECD) released new economic projections for 2025 and 2026. Overall, the global economy is expected to grow at a 2.9% annual rate this year and next. That’s a slowdown from last year’s 3.3% growth and from the OECD’s previous forecast of 3.1% for this year and 3.0% for next year. The outlook for the US economy is also worsening. The OECD now forecasts that the US economy will grow by 1.6% this year and 1.5% next year. That’s in contrast to 2024’s 2.8% growth and the OECD’s previous forecasts of 2.2% this year and 1.6% next year. The OECD also warned that growth could slow further if tariffs are raised again. See article at Reuters.com.

Mortgage rates ease slightly

Both 30-year and 15-year mortgage rates dropped by four basis points last week. That left 30-year rates at 6.85% and 15-year rates at 5.99%. Mortgage rates have been relatively stable since mid-April. 30-year rates are now exactly where they were when the year began, and 14 basis points lower than they were a year ago. See rate details at FreddieMac.com.

Productivity declines for the first time since 2022

Non-farm business productivity fell by 1.5% in the first quarter of this year. That’s the first decline in productivity since the second quarter of 2022. Productivity declines can signal trouble for the economy. Lower productivity means it is becoming more expensive to produce goods and services, which can fuel inflation. Also, productivity tends to decline when demand slows, as businesses are no longer operating close to their full capacity. See productivity report at BLS.gov.

CEO confidence has plummeted since last quarter

According to a Conference Board survey of CEOs, the confidence level of American business leaders suffered the largest quarter-to-quarter drop in the history of the survey, which goes back to 1976. Geopolitical instability was cited as the leading business risk, followed by trade and tariffs. 82% of CEOs said economic conditions were worse than six months ago, compared to just 2% who said they were better. 64% of CEOs expect conditions to get even worse over the next six months, compared to 18% who expect them to improve. 83% of CEOs now expect a recession over the next 12 to 18 months. See news release at Conference-Board.org.

All weekly news headlines from Credit Sesame

• Last week’s news roundup May 31, 2025
• Next week’s news roundup June 14, 2025
• All weekly news roundups

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