The Hidden Credit Crisis Hammering Subprime Borrowers, And Why It’s Accelerating Now

When it comes to consumer credit, there are two distinct segments, and they are at opposite ends of the credit spectrum. Super prime consumers and subprime consumers have two very different credit experiences, creating what’s described as a K-shaped credit divide.

“Consumers are migrating to the top of the K, the super prime consumers, the best, lowest risk borrowers, those that can readily access credit. People are generally hungry and excited to lend to them,” Charlie Wise, Executive Vice President of Global Research and Consulting at TransUnion, told us.

In contrast, subprime consumers, those at the bottom of the K, are having a tough time managing their finances, Wise explained.

“They are struggling with their finances and their household credit management in ways that we haven’t seen necessarily before, certainly not over the past decade,” Wise told us. 

Examining the Aspects of K-Shaped Credit

The super prime segment grew by 15 million consumers between the fourth quarter of 2019 and the fourth quarter of 2025. In contrast, consumers in the middle segments of credit such as prime plus, prime, and near prime have experienced declines since 2019, according to TransUnion.

Since 2019, the number of subprime consumers has stayed relatively stable. But all is not well. Non-prime consumers, those with subprime or near-prime credit, are grappling with higher debt loads and rising debt-to-income ratios. Both can contribute to financial strain.

“The credit market has diverged over the past several years, and that divide is becoming increasingly evident in consumer risk profiles,” said Jason Laky, Executive Vice President and Head of Financial Services at TransUnion.

“As super prime consumers gain ground, with more consumers moving into that highest-scoring tier, many below-prime borrowers are taking on higher debt loads, increasing their reliance on credit, and showing early signs of performance stress at a time when affordability pressures remain elevated.”

How Debt Has Increased by Credit Segment

Both super prime and subprime consumers have expanded their debt loads since 2019. From the fourth quarter of 2019 to the fourth quarter of 2025, super prime consumers increased their total debt by 25%. Subprime consumers increased their debt loads by 23%.

When you look at the consumer debt-to-income ratio without mortgage debt during this same time period, a different picture emerges. Subprime consumers saw their debt grow by 143 basis points from 12.8% to 14.3%. Super prime consumers saw non-mortgage debt-to-income ratio grow just 29 basis points from 5.1% to 5.4%.

Access to Credit

Subprime consumers continue to have access to credit. For example in bankcard lending, from the third quarter of 2019 to the third quarter of 2025, the share of new subprime credit accounts increased by 220 basis points. For deep subprime consumers, the share of bankcard originations grew by 320 basis points.

“(Subprime borrowers) are struggling with their finances and their household credit management in ways that we haven’t seen necessarily before, certainly not over the past decade.” — Charlie Wise, TransUnion

Lenders use credit lines to manage risk. Super prime consumers saw an 11.5% increase in new bankcard credit lines reaching $12,511 by the third quarter of 2025. Subprime consumers saw just a 7.1% increase in bankcard credit lines reaching up to $1,034.

New bankcard accounts rose 13% year over year to 21.9 million in the fourth quarter of 2025. This increase was driven largely by subprime and super prime growth.

Credit Card Trends in 2026

Here are some key credit card statistics from TransUnion from the first quarter of 2026. 

The number of bankcards in Q1 2026 reached 583.2 million, an increase over the 563 million bankcards recorded in Q1 2025. The delinquent rate for credit cards 90 days past due was 2.53% in the first quarter of 2026 compared with 2.43% for the same period in 2025, and 2.55% during the same period in 2024.

Credit card balances in Q1 2026 totaled $1.12 trillion, and the average debt per borrower was $6,519. That compares with $1.07 trillion in credit card balances for the same period in 2025, and $916.8 billion for the same period in 2023.

The number of consumers carrying a balance increased to 175.4 million in Q1 2026 from a year-ago figure of 172.0 million in the same period. The 2026 number is significantly higher than the 165.3 million consumers carrying a balance in the first quarter of 2023.

The average size of new bankcard account credit lines in the first three months of 2026 was $5,559, slightly lower than new bankcard account credit lines for the same period in the past couple of years.

An Increase in Personal Loans  

In the fourth quarter of 2025, new personal loan accounts reached a record 7.6 million, up 21.7% year over year. The drivers of this increase were subprime borrowers dealing with cashflow stress and super prime borrowers consolidating balances or financing bigger purchases.

Outstanding personal loan balances grew to a record $277 billion in the first quarter of 2026. This increase was driven by lenders giving larger loans to consumers with prime credit or better and giving smaller loans to subprime borrowers.

A Look at Mortgages

In the fourth quarter of 2025, the number of new mortgage loans saw double-digit, year-over-year growth rising 12.8% to 1.39 million. Consumers refinancing their mortgage loans drove this growth. 

Younger consumers were active in the mortgage market. Gen Z mortgage accounts increased 27.3% year over year, outpacing mortgage accounts of all other generations.

Mortgage delinquencies, accounts 60 or more days past due, edged up to 1.57% in the fourth quarter of 2025, marking the 16th consecutive quarter of year-over-year increases.

A Look at Auto Loans

The average monthly auto loan payment is on the rise. Consumers also are financing larger amounts than they have in the past when buying their vehicles. In the first quarter of 2026, new vehicle loan payments rose 4.3% year over year to $786 while used vehicle loan payments increased 2.9% to $536.

The average amount financed for new vehicle loans climbed 6.6% year over year to $45,028. And the average amount financed for used vehicle loans grew 5% to $27,232. Delinquencies on auto loans, accounts that were 60 or more days past due, edged up to 1.57%.

The Bottom Line

The credit market is shaped like a K with super prime consumers on the top and subprime consumers on the bottom. The super prime segment is growing and doing well. This segment grew by 15 million consumers between the fourth quarter of 2019 and the fourth quarter of 2025.

In contrast, consumers in the subprime segment are struggling with their finances and their credit management. Subprime consumers are burdened with higher debt loads and higher debt-to-income ratios, which leads to financial strain.