America's Consumer Credit Blind Spot: After a BNPL Holiday, Welcome to "Later."

Despite numerous forecasts predicting weak holiday sales, many US consumers used 'buy now, pay later' options and shocked the economy with a record-breaking holiday shopping period. At the same time, with car loan and mortgage delinquencies reaching 15-year highs, lenders face a 2026 reality their forecasting models never saw coming: The $2 trillion in new mortgages and auto loans written in 2025 never accounted for half of all consumers using BNPL. This massive debt load was invisible to the credit scoring models used to evaluate and issue these loans. And while many lenders have traditionally viewed deferred retail purchases as a sign of subprime behavior, this holiday season proved otherwise. Sooth’s Emotional Logic Interface — ELI — examined the potential impact of 2025’s Winter of Deferred Debt on four distinct consumer groups that leveraged BNPL for their holiday shopping.

The competing forces and key constituencies at play

6.6%: The delinquency rate on subprime auto loans approached 7% for the first time in 2025.

50% of holiday shoppers used BNPL instead of traditional credit to manage their budgets.

$1B was spent by US consumers on Cyber Monday alone: a single-day record.

BNPL HOMEOWNERS (60 million Americans)

Mortgage lenders evaluate borrowers on FICO scores, debt-to-income ratios, and payment history on reported accounts. They don't see BNPL. Sooth's analysis found 44% of BNPL-using homeowners carry Klarna debt, 41% use Affirm, and 22% use Afterpay — often simultaneously. Fintech lending platforms like Upstart, SoFi, and LendingClub are also over-indexed in this group, which around one in five plan to open a new credit line in the next six months. On paper, they look like stable borrowers. In behavior, they're stacking alternative credit while seeking more until the scoring models catch up with their debt juggling.

BNPL AUTO OWNERS (76 million Americans)

Subprime auto delinquencies hit 6.6% in early 2025 — the highest since tracking began in 1994. But the risk isn't confined to subprime. BNPL-using car owners show heavy concentration across multiple deferred payment platforms: Affirm, Klarna, Afterpay, Zip, Sezzle. 9.7% report gambling weekly. Lottery, casino, and sports betting brands appear throughout their behavioral footprint. These borrowers were approved based on credit files that never showed the BNPL load — or the risk-adjacent behaviors that often accompany financial stress.

SECRETLY SUBPRIME (55 million Americans)

The Consumer Financial Protection Bureau reported that 61% of BNPL loans are issued to subprime and deep-subprime borrowers. Many of these borrowers appear to have good credit on paper because BNPL providers don't report to credit bureaus. Sooth's analysis of BNPL users showing signs of subprime behavior found that extreme couponing was highly prevalent, along with frequent stays at budget and extended-stay hotels, which indicate housing instability. Additionally, more than 13% report engaging in gambling activity one or more times a week, twice the national average. This suggests a combination of price compression, instability, and high-risk coping mechanisms that could make this group the canaries in the BNPL coal mine.

UNDER PRESSURE (15 million Americans)

This is a liquidity crisis in real time. Among BNPL users showing acute financial stress indicators, nearly two-thirds have recently looked for jobs on LinkedIn, over 70% are seeking to add new credit cards, and they’re using gambling apps at almost ten times the national average — desperately seeking a surprise windfall to offset their growing debts and financial anxiety. While none of these behaviors appear in lenders’ credit analyses, they are strong predictors of who's already struggling to stay afloat, making them among the most likely to miss a payment when January's BNPL bills arrive — and to miss payments to other creditors as well.

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ELI's Crystal Ball: 5 Predictions — Near-Term Implicatoins from the 2026 Consumer Debt Iceberg

1. Auto loan delinquencies will spread into higher credit tiers. Subprime loans reached record delinquency in 2025. Sooth data suggests this stress is currently
   spreading to prime and near-prime borrowers — people who appeared safe but were carrying invisible BNPL loads. This could force a tightening of lending requirements and force less favorable terms for car buyers.
2. FHA early payment defaults will accelerate. FHA seriously delinquent rates are up 50 basis points year-over-year. First-time homebuyers with stretched DTI
   and undisclosed BNPL debt are the highest-risk cohort. Expect increased scrutiny on first-time buyer applications and potential tightening of FHA qualification standards.
3. Credit card applications will spike in Q1 — as a sign of crisis, not confidence. While new lines of consumer credit often signal optimism, when 71% of financially
   stressed BNPL users plan to open new cards, that's liquidity hunting. A Q1 surge in originations signals consumers are patching holes, not building wealth. Issuers may see early delinquencies rise in newly opened accounts.
4. BNPL providers will tighten before traditional lenders do. Klarna, Affirm, and Afterpay approval rates and credit losses are leading indicators of consumer stress. Watch for reduced credit limits, stricter approvals, and down payment requirements — signs that the "four easy payments" era is evolving, or potentially ending. BNPL platforms may need to define new value equations beyond simple deferral agreements.
5. Gambling and gig platforms stand to benefit most in 2026. Sooth data indicates those using BNPL services tend to lean on alternative income streams and higher risk/reward behaviors as practical and emotional coping mechanisms — stress signals that won't appear on any credit report. Increased betting activity and people suddenly listing spare rooms on Airbnb indicate consumers under water months before their activities are tracked by credit agencies.

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DATA SOURCES FOR THIS EDITION OF THE ELI REPORT

Insights are based on Sooth’s patent-pending methodology, which analyzes over 100 million intent signals from 220 million anonymized US adults to predict, with 91% accuracy, how their emotional, practical, and situational needs will influence their buying decisions and the subsequent impact on people, businesses, and the economy. In addition, the following sources were used for corroborating data and qualification of predictive insights:

• 6.6% subprime auto delinquency — record high: Fitch Ratings, January 2025
• Auto loan delinquency at 15-year high (3.88%): Federal Reserve, Q3 2025
• 61% of BNPL loans to subprime/deep subprime borrowers: CFPB "Consumer Use of Buy Now, Pay Later," January 202
• 50% of holiday shoppers used BNPL: PayPal, October 2025
• $1.03 billion BNPL spending on Cyber Monday — single-day record: Adobe Analytics, December 2025
• Holiday sales up 3.9% YoY: Mastercard SpendingPulse, December 2025
• 202.9 million shoppers Thanksgiving–Cyber Monday — record: National Retail Federation, December 2025
• FHA seriously delinquent rate up 50 bps YoY: Mortgage Bankers Association National Delinquency Survey, Q3 2025
• $2 trillion in new mortgages and auto loans in 2025: Federal Reserve Consumer Credit Data, 2025

About Sooth & ELI

Sooth is the predictive intelligence company decoding the 93% of human decisions driven by emotional, practical, and situational needs. Powered by ELI — Sooth’s exclusive Emotional Logic Interface — Sooth uncovers hidden signals, turning audience behavior into predictive foresight. Sooth’s patent-pending methodology uses artificial intelligence to cross-reference more than 100 million intent signals with data on 300 million individuals worldwide to predict buyer tendencies with 91% predictive accuracy. For more information, visit soothbetold.com.

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