Lenders Pair Growth with More Strategic Risk Management, Expanding Credit Access

TransUnion has published its Q3 2026 Credit Industry Insights Report (CIIR), finding that credit card and unsecured personal loan (UPL) lenders increased lending over the past year, while a growing proportion of new accounts went to borrowers with below-prime credit scores. Even as they expanded, lenders used strategic risk-mitigation measures to reduce delinquent balances across their portfolios.

After a period of rapid growth, the credit market has shifted to a steadier expansion pace. Total outstanding balances rose approximately 3% year over year (YoY) in Q3 2026, while the number of credit-active consumers reached 263 million. The K-shaped pattern that developed in recent years—where growth was concentrated among both super-prime and below-prime consumers—has largely stabilized.

In this environment, lenders offering unsecured credit products, including credit cards and UPLs, have increasingly turned to borrowers with below-prime credit scores—660 or lower according to VantageScore 4.0—as a source of growth. They are applying targeted risk-management strategies to balance portfolio expansion with stable credit performance.

“Lenders have limited exposure and improved portfolio performance through the use of strategies such as lower credit lines, smaller loan amounts and interest rate adjustments for consumers in below prime risk tiers. As a result, balance-level delinquencies have declined even as a greater share of lending has gone to higher-risk borrowers,” said Jason Laky, EVP and Head of Financial Services at TransUnion.

Note: Originations are viewed one quarter in arrears to account for reporting lag. Below prime is defined as 660 and below as measured by VantageScore 4.0.

Lenders Expand Credit to Below Prime Tiers

The auto market has followed a similar pattern. Subprime originations have rebounded sharply, outpacing all other risk tiers in year-over-year growth for five consecutive quarters and rising 9.8% in the latest quarter. Although lenders broadened credit access for higher-risk consumers, they managed risk effectively. Consequently, 60+ DPD balance-level delinquency remained stable, falling one basis point year over year to 1.64% in Q3 2026.

Charge-off data also indicate that lenders are extending credit to below-prime consumers without materially increasing risk. Credit card charge-offs were virtually unchanged year over year, declining slightly from $15.79 billion to $15.76 billion in Q3 2026. Unsecured personal loans (UPL) showed a similar pattern, with charge-offs decreasing 11% year over year to $3.5 billion. Dollar charge-offs fell despite an increase in the number of charged-off accounts, suggesting lenders controlled exposure and limited loss severity while expanding lending to higher-risk borrowers.

“The most effective lending strategies recognize that financial success is shared between borrowers and lenders,” said Charlie Wise, Head of Global Research and Consulting at TransUnion. “As lenders continue balancing growth with prudent risk management, consumers are increasingly focused on managing budgets and meeting obligations. When both sides make thoughtful, data-informed decisions, credit can remain accessible, sustainable, and beneficial for consumers seeking financial opportunities and lenders safeguarding long-term portfolio performance.”

Q3 2026 CIIR Credit Card Summary:

• Bankcard originations hit a record 22.4 million in Q2 2026, up 9.5% YoY and marking the seventh consecutive quarter of growth. Non-prime borrowers accounted for one in four newly opened accounts, with originations rising 16.5% YoY among subprime borrowers and 11.6% among near-prime borrowers. This trend highlights issuers’ continued efforts to expand financial inclusion across risk segments.
• Total bankcard balances increased 4.5% YoY to $1.16 trillion in Q3 2026, extending a steady growth trend that has remained between 4.2% and 4.6% since Q1 2025. This measured pace reflects resilient consumer spending and a growing number of active cardholders.

“The bankcard market continues to demonstrate healthy growth, with record originations, steady balance expansion and broadening credit access across risk tiers,” said Paul Siegfried, SVP and Credit Card Business Leader at TransUnion. “Much of that growth is coming from subprime and near-prime consumers, reflecting issuers’ confidence in serving a wider range of borrowers. Borrower-level delinquency has trended higher over the past year; however, improving balance-level performance suggests lenders are successfully managing credit risk. Looking ahead, consumers continue to enjoy an unmatched position of competitive card offers as lenders prioritize disciplined growth strategies.”

Q3 2026 CIIR Unsecured Personal Loan Summary:

• Mortgage originations climbed 12.8% YoY to 1.5 million in Q2 2026, as lower interest rates strengthened both purchase and refinance activity. Refinances grew by approximately 40%, lifting their share of total originations to 21.5%, compared with 17.4% a year earlier. Rate-and-term refinances drove much of the growth, increasing by nearly 60%.
• Mortgage performance remained broadly stable, although serious delinquencies continued to rise from the historically low levels recorded during the pandemic. The borrower-level rate of delinquencies of 60 days or more reached 1.64% in Q3 2026. Increases were concentrated mainly in FHA loans, which now account for nearly half of seriously delinquent mortgage accounts. Performance across other loan categories, including Fannie, Freddie, and Jumbo, remained stable.
• Home equity originations rose 10.1% YoY to 757,000. Home Equity Line of Credit (HELOC) originations increased 20.3%, accounting for more than half of all home equity originations and reflecting sustained demand for flexible access to homeowners’ accumulated equity.

“Lower rates created a meaningful lift in mortgage activity during the second quarter, particularly for refinance and home equity lending,” said Satyan Merchant, SVP and Automotive and Mortgage Business Leader at TransUnion. “While overall mortgage performance remains relatively stable, the concentration of serious delinquency among FHA loans warrants monitoring. Looking ahead, interest rates will continue to shape purchase and refinance demand. At the same time, home equity products may remain an important source of liquidity for borrowers seeking to preserve their low mortgage rates.”

Q3 2026 Mortgage Trends:

Note: *Originations are viewed one quarter in arrears to account for reporting lag.

To read the full report, click here.