Looking for more evidence of a topsy-turvy, “K-shaped” economy? Check out what’s happening to credit scores.
A report from TransUnion Monday showed the share of people classified as low-risk, super prime borrowers — having credit scores of 781-850, typically — is on the rise, increasing from 37.1% in the third quarter of 2019 to 40.9% in this year’s third quarter. The subprime segment, or riskier consumers with credit scores of 300 to 600, has also increased, erasing progress made during pandemic-era stimulus and relief programs to return to 2019 levels.
Meanwhile, the percentage of consumers in the in-between levels — near prime, prime, and prime plus — is lower than it was pre-pandemic, as more Americans shift to either extreme of the credit risk spectrum. The 14.4% of consumers that were considered subprime in the third quarter may face higher interest rates and carry a greater likelihood of default.
“We are seeing, and have been seeing, this divergence in the credit quality, so a flight to both the super prime and to subprime,” said Michele Raneri, vice president and head of US research and consulting at TransUnion. “We’ve seen it going on for a few years now, and now it looks like it’s at a point that it’s substantiating the K-shaped economy.”
Read more: 10 tips to improve your credit score
Warning signs abound of a splintered economy in which well-off households are thriving as lower-income and younger Americans struggle. As it stands, wealthier families are driving healthy spending levels even as consumer confidence weakens, unemployment creeps up, and prices rise. It tracks that the trend would show up in consumers’ credit scores too.
“The beginning of the next step is seeing how this subprime group is able to manage the credit that they’ve got,” Raneri said.
So far, delinquencies aren’t shooting up dramatically, even as credit card and auto originations for both subprime and super-prime consumers have increased markedly in the past year, TransUnion said.
In fact, credit card delinquencies declined on the year as total balances crept higher to hit $1.11 trillion, with an average debt per borrower of $6,523.
Some headwinds are showing up for auto loans, though. Originations were up 5.2% in the third quarter of 2025 from last year, led by super prime and subprime borrowers. But the share of accounts 60 days or more past due rose 4 basis points year over year as monthly payment costs rose, TransUnion said, while “delinquency rates among 2024 vintages remain elevated compared to 2019, especially within prime and below-prime risk tiers, signaling continued pressure on credit performance.”
