US gets hit with another credit downgrade — agency warns of ‘sustained deterioration’ of finances. What you need to know

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It wasn’t that long ago that Moody’s knocked America’s sovereign credit rating down a peg — and now, the U.S. is taking another hit to its credit score. This time, it’s Scope Ratings sounding the alarm, warning that Uncle Sam’s financial health is looking shakier by the day.

On Oct. 24, Scope downgraded the U.S. local and foreign currency long-term issuer and senior unsecured debt ratings from AA to AA-. (1)

“Sustained deterioration in public finances and a weakening of governance standards drive the downgrade,” the agency said in a statement.

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With “persistently elevated” federal deficits and a rising net interest payment burden, Scope expects the U.S. public debt-to-GDP ratio to reach 140% by 2030 — well above its sovereign peers. The agency pointed to the extension of precious tax cuts and a heavy load of mandatory spending as major factors that will limit budgetary flexibility in the near term.

Looking further out, Scope warned that America’s fiscal challenges are compounded by massive, unfunded liabilities — particularly from Medicare and Medicaid.

But rising debt isn’t the only red flag. Scope also took aim at what it sees as cracks forming in Washington’s political machinery.

“The weakening of governance standards lowers the predictability of U.S. policymaking, increases the risk of policy missteps and reduces the capacity of Congress to address the country’s structural fiscal challenges,” Scope said.

The downgrade comes just five months after Moody's cut its U.S. credit rating in May — following similar moves by S&P Global in 2011 and Fitch in 2023. It’s hardly a surprise, though. America’s national debt recently blew past $38 trillion, prompting critics to warn that U.S. lawmakers are failing to live up to their “basic fiscal duties.” (2)

Washington’s fiscal woes may seem far removed from everyday life, but the underlying lesson is universal: bad money habits eventually catch up. And unlike the federal government, you can’t just keep raising your own debt ceiling.

So here’s a look at a few ways to boost your own fiscal health in 2025 — and beyond.

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Trim your spending — without giving things up

Most of our spending falls into two buckets: necessities — like rent, groceries, utilities and healthcare — and discretionary spending, such as dining out, entertainment, shopping and hobbies.

When trying to improve their finances, many people focus on cutting back the discretionary side, but trimming waste isn’t just about skipping lattes or takeout. Even in essential categories, you may be spending more than necessary. The good news? With a bit of research, you can often significantly reduce these costs.

For instance, car insurance is a major recurring expense and many people overpay without realizing it. According to Forbes, the average cost of full-coverage car insurance is $2,149 per year (or $179 per month).

However, rates can vary widely depending on your state, driving history and vehicle type and you could be paying more than necessary.

By using OfficialCarInsurance.com, you can easily compare quotes from multiple insurers, such as Progressive, Allstate and GEICO, to ensure you’re getting the best deal.

In just two minutes, you could find rates as low as $29 per month.

Read more: Warren Buffett used 8 simple money rules to turn $9,800 into a stunning $150B — start using them today to get rich (and then stay rich)

Protect your purchasing power — and invest for passive income

Higher inflation is one consequence experts often warn about as America’s national debt keeps climbing. (3) And that shouldn’t come as a surprise: over the decades, inflation has steadily chipped away at Americans’ hard-earned dollars. According to the Federal Reserve Bank of Minneapolis inflation calculator, $100 in 2025 buys what just $$12.05 did in 1970.

The good news? Savvy investors have long found ways to hedge against inflation — and real estate is a prime example, offering the added benefit of passive income.

When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.

Today, you don’t need to buy a property outright to invest in real estate. Crowdfunding platforms like Arrived have made it easier than ever for everyday investors to gain exposure to this income-generating asset class.

Backed by world class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.

The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.

Another option is First National Realty Partners (FNRP), which allows accredited investors to diversify their portfolio through grocery-anchored commercial properties without taking on the responsibilities of being a landlord.

With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to Triple Net (NNN) leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.

Simply answer a few questions — including how much you would like to invest — to start browsing their full list of available properties.

Let your spare change grow

One of the easiest ways to cut financial waste is by putting your spare change to work instead of letting it sit idle. That’s where micro-investing apps like Acorns come in.

When you make a purchase on your credit or debit card, Acorns automatically rounds up the price to the nearest dollar and invests the difference — the coins that would wind up in your pocket if you were paying cash — into a diversified portfolio of ETFs.

Buying a coffee for $3.40? The app rounds it up to $4 and invests the extra $0.60. Over time, those small amounts can add up — especially if you’re consistently spending and saving.

It’s a simple, set-it-and-forget-it way to build wealth from money you might not even miss — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Scope Ratings (1); Al Jazeera (2); PBS (3); Federal Reserve Bank of Minneapolis (4)

This article originally appeared on Moneywise.com under the title: US gets hit with another credit downgrade — agency warns of ‘sustained deterioration’ of finances. What you need to know

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