Riskiest Consumer Borrower Ranks Swell as Personal Loans Surge

The share of consumers in the subprime credit risk category has reached levels not seen since 2019, a sign that a growing number of borrowers are in poor financial health.

Subprime borrowers accounted for 14.4% of consumers tracked by credit reporting firm TransUnion in the third quarter, up from 13.9% in the same period last year. It’s the highest share for the period since 2019, when 14.5% of borrowers fell into the subprime category.

The number of higher-risk borrowers shrank during the Covid-19 pandemic and immediately after as consumers took advantage of reduced expenses and relief programs to pay down ...