Writer: Eric Bank
Editor: Lillian Guevara-Castro
Reviewer: Adam West
Key Takeaways
- Late payments among subprime borrowers were up 2.5% year-over-year during June 2025.
- Delinquencies on auto loans increased across all stages of lateness and are now higher than pre-pandemic levels.
- Fewer new credit cards were approved, suggesting lenders are being more cautious with high-risk borrowers.
Subprime credit delinquencies increased in June, growing 2.5% year-over-year, according to the latest edition of CreditGauge™ published July 29 by VantageScore.
Growing repayment distress was evident among the lowest VantageScore credit tiers as credit delinquencies increased across most products and delinquency bands, except for credit cards.
Credit cards showed only modest improvements across all days-past-due (DPD) categories. The average VantageScore 4.0 credit score remained at 702 in June, decreasing just 0.05 points from the prior month. That implies fewer debtors are getting back on their feet — they’re instead going deeper into arrears.
That inertia also masks a widening gap between credit characteristics by borrowers. The VantageScore prime segment shrank, while subprime and near-prime shares edged slightly higher.
Superprime market share gained by a slim margin, but the middle ground retreated. This suggests that the distribution of credit scores is shifting as some consumers improve into VantageScore Superprime while others move into lower tiers, leading to a broader spread across the credit spectrum.
Bigger Delinquencies Signal Ongoing Payment Struggles
Meanwhile, early-stage credit delinquencies (30–59 days past due) dipped slightly from May, but middle-stage (60–89 days past due) and late-stage (90–119 days past due) rates moved higher. For subprimes, that translates to higher percentages falling into prolonged delinquency.
Borrowers are missing payments, but beyond that, they are falling several months behind, with fewer returning to current status. That’s a troubling sign to lenders with tight risk bands.
Auto loans stood out in June for their rising delinquency rates. Loss rates climbed across all segments — early, middle, as well as late — compared with both previous months and year-ago levels.
The average auto loan balance was $24,500, with the balance-to-loan ratio topping 63.86%, a high last seen more than a year ago. With automobile prices and interest rates still elevated, borrowers are likely stressed to the limit.
For auto lenders that are not prime-focused, it creates a difficult market. As long as delinquencies remain high and payment tension mounts, charge-offs may increase and recovery costs become more difficult to maintain.
Caution Grows In The Credit Card Industry
Issuers appear to be more selective with new card approvals. Credit card originations fell 0.05% in June from the previous month prior, month-over-month, and were slightly lower year-over-year.
Although delinquency within this segment was slightly better, the moderation in originations may be a sign of worry regarding portfolio health rather than current payment trends.
Meanwhile, average credit card balances edged up to $6,400 during June, and utilization increased to 30.4%. Modest as they are, these are signs of a shift toward dependency on revolving credit — the kind of red flag that suggests a further deteriorating macro environment.
At the same time, total average household consumer credit balances climbed to $106,100, a five-year high. Even with steady utilization, such a large amount of leverage leaves borrowers susceptible to income disruptions.
What It Means for Subprime Credit Providers
The CreditGauge report doesn’t set off sirens across all categories, but it does show conditions deteriorating within subsegments significant to subprime lenders. As more accounts slip into late-stage delinquency, the cost of collections, servicing, and potential charge-offs continues to climb.
Subprime early-stage delinquencies held steady in June, but signs of strain in near-prime and prime credit tiers — especially in mortgages and auto loans — raise concerns that pressure could soon trickle down to riskier borrowers.
Institutions that specialize in subprime lending should pay close attention to:
- Expanding risk from accounts delinquent by 90 days or more
- Greater oversight by investors or regulators inspecting risk controls
- Margin compression during recovery efforts eating into loan profitability
Proactive steps — like stratifying delinquency risk, reassessing underwriting standards, and engaging more effectively with struggling borrowers — can help contain losses. Credit stress rarely happens overnight, but rising late-stage delinquencies suggest the window to act is closing.
