Why traditional credit scores are failing Gen Z—and what you can do about it

An increasing number of Gen Z and Millennials in the UK believe that traditional credit scores are failing them.

A recent report from Hello Millions found that 41% of under-35s feel “unfairly judged” by their credit files.

Despite having stable incomes, minimal debt, and sound budgeting habits, many still struggle to access mortgages, personal loans, and competitive interest rates due to a credit system rooted in outdated metrics.

"A system originally designed in the 1980s, UK credit ratings (like those from Experian or Equifax) heavily weight historical debt and credit card use: something fewer young people rely on in the age of Klarna and Monzo," a release by Hello Millions said.

From Monzo to mortgages: Why the numbers don’t add up

Gen Z’s financial habits have evolved rapidly.

They are less reliant on traditional debt products and more likely to use fintech tools like Revolut, Monzo, and Apple Pay.

However, these tools often go unrecognised by legacy credit bureaus such as Experian and Equifax.

The result is that responsible young consumers—those who pay rent on time, avoid credit cards, and budget effectively—may still score poorly or be marked as “thin file” applicants.

Freelancers and gig workers are particularly vulnerable.

Without a conventional, salaried job, their fluctuating income streams can lower their credit scores, even when they earn consistently and save diligently.

Many are frustrated by the opacity of the system and unsure how to challenge errors on their credit reports.

How you can tackle the issue

Startups and challenger banks are now experimenting with alternative scoring systems that focus on real-time behaviour rather than backward-looking debt profiles.

These models track rent payment histories, subscription management, side hustle income, and even savings discipline.

Some services, such as CreditLadder and Canopy, enable tenants to report rent payments directly to credit agencies, helping them build a usable credit history.

Meanwhile, budgeting apps like Snoop and Plum are promoting financial education and real-time tracking over credit juggling.

Hello Millions says one should also dispute score errors actively with all three credit bureaus, as well as track BNPL as it can affect one's score.

“We’ve inherited a credit model from the 1970s, but it’s now being applied to TikTok generations living on Klarna and Revolut. It’s no surprise it’s breaking down,” Hello Millions said in a release.

A call for inclusivity and adaptability

“Credit scores were once a useful shorthand to assess risk, but for young Brits today, they’re becoming outdated gatekeepers. The system rewards credit card juggling and penalises those who avoid debt. It's backwards," Consumer Finance Expert Joerg Nottebaum from Hello Millions, said.

For a growing number of young people, especially those from minority or lower-income backgrounds, it is becoming increasingly clear that the traditional credit system is ill-equipped to evaluate financial responsibility in a digital, self-employed, subscription-heavy world.

"The future of credit assessment should be adaptive, inclusive, and behavioural," Nottebaum says.

"We need systems that look at real-time cash flow, verified income sources, and digital trust indicators. Otherwise, we’re punishing an entire generation for being debt-averse and tech-savvy, which should be strengths, not red flags,” he said.

Until such changes become mainstream, young consumers are being encouraged to actively report rental data, monitor BNPL impact, dispute errors, and push lenders for transparency on how decisions are made.