The data: Subprime borrowers were the greatest factor behind rapid growth in unsecured personal loans in Q3 2025, according to TransUnion’s Q4 2025 Credit Industry Insights Report.

Digging into the data: Subprime originations grew 32.5% in Q3 YoY compared to 21.5% for the near-prime and super-prime segments. And the total unsecured personal loan balance climbed to a record $276 billion in Q4. In addition, the overall delinquency rate ticked up, led by an increase of about half a percentage point in subprime.

Trendspotting: Unsecured personal lending has been in the news amid potential new demand and credit stress among consumers with student loan debt:

• SoFi CEO Anthony Noto said a credit card rate cap proposed by President Trump could push borrowers toward personal loans, which would benefit SoFi as it filled the credit gap. If that rate cap or a similar rule became law, the risk profile of personal loan portfolios would rise as consumers who held balances were priced out of cards.
• Some borrowers’ ability and willingness to repay personal loans has also been in question. Federal student loan borrowers may prioritize student loan repayments over credit cards and personal loans. Stress among Gen Zers is apparent, with some already having struggled with credit quality.

Implications for banks: However politics pans out, banks have a clear opportunity to capture growing demand for personal loans while carefully managing risk. Gen Z is a big part of that opportunity. But amid student loan debt challenges, some Gen Zers are also a substantial risk.

For now, banks appear to view expanding credit as an upside: Wells Fargo, for example, has seen strong fundamentals in its credit portfolio, and JPMorgan is anticipating growth. The key is to weather macro uncertainty: further impact from tariffs, trade tensions, geopolitics, the fiscal deficit, and inflated asset prices.