K-Shaped Economy: Rising Credit Disparities Highlighted by TransUnion Research
Recent findings from TransUnion paint a vivid picture of a K-shaped economy in the realm of consumer credit. The percentage of consumers classified as subprime—those with credit scores below 600—has seen a slight increase towards the end of 2025 compared to previous years. In contrast, the population of super-prime consumers, who boast credit scores exceeding 781, has surged even more dramatically over the same period.
The report confirms that while the extremes of the credit spectrum expand, the middle ground is diminishing. Both subprime and near-prime segments are accumulating more debt; however, they show signs of financial stress as their monthly payment obligations consume a more substantial portion of their income.
According to Jason Laky, TransUnion’s executive vice president and head of financial services, "As super-prime consumers gain ground, with more moving into that highest-scoring tier, many below-prime borrowers are taking on higher debt loads. They are increasingly reliant on credit and beginning to display early signs of performance stress. This is occurring alongside elevated affordability pressures."
By the end of 2025, 14.8% of consumers fell into the subprime category, edging closer to pre-pandemic levels of 15.1% recorded in late 2019. Conversely, the super-prime demographic constituted 40.7% of consumers in the same timeframe.
The experiences of borrowers reveal stark contrasts based on credit tier. Super-prime consumers have recorded the largest percentage rise in overall debt since the end of 2019, with their average outstanding balances escalating by 25%. Despite this growth, their monthly debt payments relative to gross monthly income—excluding mortgage payments—remains at a manageable 5.4%.
In stark contrast, near-prime and subprime borrowers are grappling with significantly higher debt-to-income ratios of 16.5% and 14.3%, respectively. For these groups, payments for auto loans and credit card debts are increasingly encroaching on their incomes as affordability concerns intensify.
Michele Raneri, TransUnion’s vice president and head of research and consulting in the US, explained, "Super-prime consumers can absorb more inflation and costs, in relation to their income, whereas non-prime borrowers struggle to do so."
Despite a slight uptick in credit card delinquencies in the first quarter compared to the beginning of 2025, figures remain close to 2024 levels. Similarly, consumer delinquencies regarding personal loans are tracking with 2023 trends, while mortgage delinquencies have shown an upward trajectory, remaining substantially lower than during the 2008 financial crisis.
This situation paints a complex picture of the current financial landscape, underscoring the growing divides between consumers at different ends of the credit spectrum and the resulting implications for the broader economy.
Summary
TransUnion’s latest findings reveal a widening gap in credit scores among consumers, indicating a K-shaped economic recovery. While subprime consumers are increasing, super-prime individuals are benefiting significantly. This disparity affects debt absorption capabilities, with super-prime consumers managing lower debt-to-income ratios compared to their subprime counterparts, who are increasingly strained. Overall, while delinquencies are rising slightly, they’re still manageable compared to pre-crisis levels, illustrating ongoing pressures in the consumer credit landscape.
