The share of consumers taking out the riskiest form of loans has reached its highest peak this decade, a sign of growing financial stress for many Americans.
Additionally, consumer-level delinquencies declined seven basic points year-over-year to 2.37%, indicating strengthening consumer credit health, the report noted.
“We are seeing a divergence in consumer credit risk, with more individuals moving toward either end of the credit risk spectrum,” Jason Laky, executive vice president and head of financial services for TransUnion, said in the report. “This shift suggests that while many consumers are navigating the current economic climate well, others may be facing financial strain.”
“We’re sort of moving in the direction of two kinds of players in the economic market out there,” Lucia Dunn, sports and society research professor of economics at Ohio State University, told Fortune. “I’m not so worried about the super prime category going into debt, maybe buying a Lamborghini instead of a Porsche.”
“We are losing the middle class,” Dunn said. “And when you get to a society where there are a lot of people at the bottom and then a small group at the top, that’s a prescription for real trouble.”
