The share of consumers taking on subprime loans accounted for 14.4% of borrowers in 2025’s third quarter, up from 13.9% from the same period in 2024 and the highest since 2019, according to a TransUnion report released Monday, which analyzes consumer credit data. About 25% of the U.S. population has a FICO credit score below 660, meaning they are subprime, according to Apollo chief economist Torsten Sløk, citing data from the Federal Reserve Bank of St. Louis.

The share of consumers in the subprime credit risk category fell during the pandemic as government stimulus helped many Americans pay down their debts. But as the subprime tier swells once more, it adds to signs that many are facing increased financial pressures: The percentage of subprime borrowers at least 60 days late on auto loan payments has reached 6.43%, double what it was in 2021, according to Fitch Ratings. Per property data firm ATTOM, August marked the sixth straight month of year-over-year rising home foreclosure filings.

But the struggles of many borrowers don’t tell the full story. TransUnion also reported a growing share of super prime borrowers—which increased from 37.1% in 2019’s third quarter to 40.9% in the same period this year. The credit market has also expanded, growing the number of super prime borrowers by 16 million since 2019. These borrowers have higher credit scores and are likely to get more favorable loan terms, such as lower loan interest rates and higher credit limits.

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.” 

Signs of a K-shaped economy

Credit loan data aligns with what some economists are calling a K-shaped economy, one where higher-income earners are spending as they usually would on discretionary purchases like travel and premium goods, while lower-income earners cut back on dining out or trading down on purchases at the grocery store.

“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.”

Indeed, the Chicago Fed Advance Retail Trade Summary estimated retail sales excluding autos rose in September, building on a 0.6% growth from July to August. Economists have attributed the strong growth indicators in the face of sustained tariff uncertainty and beleaguered labor market to wealthier households continuing to spend, business as usual. A Moody’s analysis last month found the bottom 80% of earners spent in line with inflation since COVID, while the top 20% were responsible for economic growth.

“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.”