Credit cracks are spreading across cards, auto loans, and prime borrowers. Here’s what the data shows, what markets miss, and where smart money is moving next.
Credit Cracks Are Spreading: Rising Delinquencies And Recession Signals To Look Out For In 2025.
In earlier pieces, I focused on what most of Wall Street had been overlooking. Mortgage delinquencies were the first signal. Then came auto loan defaults, reaching a 15-year high where even subprime borrowers began missing payments on the one item that often determines employment: their vehicle. Credit cracks are appearing.
These weren’t isolated issues. They marked a shift from stretched to strained across consumer credit. Now that strain is expanding steadily and across layers of the market. And still, most investors aren’t pricing it in.
Credit stress doesn’t erupt. It spreads. We’ve moved from warning signs to a broader spillover. Repricing is the next phase and it’s already in motion.Credit Is Weakening From The Middle
This is no longer just about subprime risk. A Bankrate report shows credit card balances have jumped over 50% since early 2021. But more telling is who’s under pressure now.
Prime borrowers with strong credit and stable income are starting to slip. Experian’s Q3 2024 data reports that while average FICO scores remain at 715, monthly non-mortgage debt payments have climbed 5.2% year-over-year. That tension is showing up in student loans and other floating-rate debt.
Buy Now, Pay Later platforms are adjusting. Klarna, Affirm, and Afterpay are shortening repayment terms and tightening approval standards. They’re reacting to real-time data from their own books.
Stress is moving up the credit curve, and the signs are visible.Lending Standards Are Tightening Fast
Defaults are rising and lenders are pulling back.
