Spike in Subprime Credit Delinquencies Indicates Growing Financial Strain in 2025

VantageScore CreditGauge™ Report for June 2025

The recent findings from VantageScore's CreditGauge report reveal alarming trends in the American credit landscape. As of June 2025, subprime credit delinquencies have surged by 2.5% compared to the previous year, indicating a growing distress among borrowers with low VantageScores.

Increasing Financial Distress

According to Susan Fahy, EVP and Chief Digital Officer at VantageScore, a troubling number of subprime consumers are struggling to keep up with their credit payments, putting them in a more precarious financial position. The report outlines that delinquencies are not only climbing among subprime tiers but are becoming more severe, especially concerning auto loans.

The current economic climate appears to be squeezing these borrowers further, with rising costs making it challenging to manage even basic repayments. Insights from the report captured a comprehensive overview of credit behaviors across various products, noting that while credit card delinquencies showed minor improvements, auto loans are experiencing significant strain.

Auto Loan Delinquencies Lead the Rise

Among the credit products, auto loans have demonstrated the most substantial increase in delinquencies. This uptick signals increased borrower stress after recent months of heightened credit originations. The report noted a rise in all Days-Past-Due (DPD) categories—indicating a worrying trend that exceeds pre-pandemic levels. Borrowers face not only short-term struggles but also deeper, more entrenched financial difficulties.

A Mixed Bag for Credit Cards

In contrast to auto loans, credit card origination showed a slight decline of 0.05% month-over-month. Banks are reportedly tightening their lending standards, leading to a cautious approach in extending credit. The year-over-year declines in new originations across various products, including personal loans and auto loans, signal tighter lending conditions than seen previously.

Implications for the Economy

The overall increase in mid- and late-stage delinquencies suggests that borrowers are not just struggling to meet payments but are also moving toward more severe delinquency categories. Early-stage delinquencies show an increase of 0.07% for auto loans and 0.06% for mortgages compared to last year, hinting at an expanding cycle of debt that could continue to spiral if not addressed.

The CreditGauge serves as a monthly analysis designed to shed light on the overall health of U.S. consumer credit. This report encapsulates a significant moment in consumer credit trends, emphasizing the need for stakeholders to scrutinize these shifts closely. For a deeper dive into the latest data and insights, stakeholders can visit the VantageScore website where the full report is accessible.

As the U.S. economy navigates these uncertain waters, the plight of subprime borrowers will remain a critical issue for financial institutions and policymakers. It's essential to monitor these developments for potential impacts on various sectors tied to credit, lending, and consumer behavior.

For more updates, viewers are encouraged to watch CreditGauge LIVE, a monthly series from VantageScore that discusses these findings in detail and explores broader implications for consumer credit management.

Conclusion

The increase in subprime credit delinquencies signals shifting tides within the U.S. credit landscape. As financial strain mounts, borrowers may face ongoing challenges which could pose risks not only to their financial health but also to the wider economy. Monitoring these trends will be crucial, not just for understanding consumer behavior, but for the institutions responsible for developing sustainable credit solutions that can withstand changing economic conditions.