Commentary - Loan Default Rates USA
- Max Meier
- 29. Sept. 2025
- 2 Min. Lesezeit
🚨 2 Headlines and developments that should make investors and economists nervous 🚨
It doesn't always have to be a million-dollar mortgage that causes problems.
1. Americans' credit scores are tanking over record student loan delinquencies
Borrowers haven't been paying back their student loans. Now delinquencies are at their highest rate on record and credit scores are suffering, a new report found.
More than 10% of consumers with a student loan on their credit file haven’t made a payment in more than 90 days, according to a credit trend report released Tuesday from Fair Isaac Corporation (or FICO) — a credit scoring company used by 90% of top U.S. lenders. Out of the 21 million consumers scored in FICO’s credit report, 10% have scheduled federal student loan payments as of April.
Out of that 10% — 3.1%, or 6.1 million consumers, had a student loan delinquency put on their credit report from February to April, according to the report.
The rate of delinquencies reported has increased 25% from last April’s rate of 7.9% to a rate of 9.8% in April of this year, it added.
These delinquencies took a big swing on borrowers’ credit. On average, the 6.1 million consumers with student loan delinquencies saw their credit score drop 69 points in the reported time frame — pushing the average score below 600.
About 25% of these borrowers saw their credit score plunge more than 100 points.
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2. Americans are drowning in auto loan delinquencies
The growing costs to buy and maintain a car – exacerbated by inflation and tariffs – are leading to rising auto loan defaults and repossessions and a potential crisis for American consumers.
Cars are more expensive than ever, according to the CFA report, "Driven to Default: The Economy-Wide Risks of Rising Auto Loan Delinquencies." The average vehicle sells for nearly $50,000 and almost 20% of new car buyers are paying $1,000 or more a month, the report said.
Nearly 1 in 5 new car buyers in the first quarter of 2025 have a loan that is seven years long. Used car prices had also risen 6.3% year over year in June 2025, CFA said.
Americans owe more than $1.66 trillion in auto debt.
Car buyers with above-average credit scores (620-679) were twice as likely to fall behind as they were before the pandemic, the report said. Borrowers aged 18 to 29 are also falling 90 or more days late on auto loans faster than older borrowers.
Repossessions are at the highest level since 2009 and jumped an estimated 43% from 2022 to 2024, the report said, citing data from Cox Automotive Market Insights and Outlook.
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