Before you read the Wall Street Journal (WSJ) article, here are some additional statistics and graphs from the article and elsewhere. The WSJ article focuses among consumers with the worst credit scores.

• Distribution of credit scores as of April 2022, from a CNBC article in January 2023 (please share updated data if you can find it). The WSJ article defines subprime as sub 660, which is roughly around 25-30% of US consumers with credit scores
• Graph of share of 30 days or more delinquent subprime (sub 660) debt
• Graph of share of 30 days or more delinquent subprime (sub 660) debt, broken down by credit score. The trend for those sub 660 is pretty unremarkable, and it is those sub 580 credit score really seeing a big uptick. This is the bottom 15% roughly of US consumers with credit scores (see first graph).
• Average credit score is around 710 currently (Business Insider in October 2022 citing Experian data from 2021). It was 687 in 2010. Here is a table for all ages, using 2021 data. Minnesota has the highest average at 742, while Missisipi averages 681.
• What about across all credit scores? Well the share delinquent more than 90 days is 3.73% as of Q4 2022; more than 60 days is 1.84% (CNBC on Feb 4). I couldn't find the most recent 30 day or more delinquency rate but from Ally Bank it appears to be around 2-3%. Beware of some fear-mongering when you hear statistics like 'delinquencies rose 30%' because often it's a move from say 2% to 2.6%; the level is already very low so the percentage change is not very meaningful.
• The subprime (< 660 credit score) delinquency rate for 30 days or more debt is 9.3%

Article

Article Deck: Borrowers with low credit scores fall behind in numbers unseen since 2010

The U.S. economy is on a steady footing and the unemployment rate is superlow. Yet a rising number of Americans are falling behind on their car payments.

Some 9.3% of auto loans extended to people with low credit scores were 30 or more days behind on payments at the end of last year, the highest share since 2010, according to an analysis by Moody’s Analytics.

The past few years have been unusually good for consumers, who stowed away extra money during the pandemic, but sky-high inflation is eating away at those gains. Car prices, in particular, jumped because of a shortage of vehicles. Many borrowers took out large loans to buy them, leaving little breathing room to keep up with payments if they hit a rough patch.

“The households that were on the financial ledge to begin with might have been tipped to the point where it’s hard to keep up on the car loan and everything else, and people have to make some very hard decisions,” said Pamela Foohey, a professor at Cardozo School of Law who studies consumer law.

Stress in the auto-loan market is concentrated among borrowers with credit scores below 660 and is especially high among people with bottom of the barrel credit. But the stress could spread if the U.S. goes into a recession, as many economists expect. If job losses increase, many more consumers might find themselves unable to keep up with the record amounts of debt they took out in recent years.

[…] Borrowers who took out big loans at the height of the boom owe far more than their vehicles are worth. Those buyers are sticking lenders with bigger losses when they fall behind.

Ally Financial Inc., which operates a large auto-lending business, said in January that the loans it extended between mid-2021 and mid-2022 are experiencing bigger early losses than its other loans. In the fourth quarter, the percentage of its car loans that were more than 60 days past due rose above prepandemic levels for the first time.

Car prices peaked when borrowers’ financial profiles looked especially strong. Consumers had received government stimulus and cut back on spending early in the pandemic, which padded their savings. Then stock prices surged, and a booming economy helped people land hefty raises.

Consumers’ credit scores rose, which might have made underwriting less precise, according to Ryan Nash, an analyst at Goldman Sachs who covers banks. Lenders were able to make big loans to borrowers, sometimes on the assumption that their finances had strengthened permanently.

“2021 was a bit of the Wild West in the auto market,” Mr. Nash said.

Nearly a fifth of banks said they eased credit standards for auto-loan applicants in the first half of 2021, according to a Federal Reserve survey of senior loan officers, while more than a 10th did in the second half. Many said they lowered minimum credit score requirements that year.

Consumer lawyers said that when cars were in short supply during that time, some dealers were able to sell vehicles that were in worse condition, increasing the risk that they would break down or require major repairs. A key reason borrowers stop paying is that the car stops working.

“We get a tremendous number of calls from people who bought cars that never should have been put on the road,” said Daniel Blinn, a Connecticut-based attorney who has sued dealerships and auto lenders.

The number of people losing their cars to repossession rose 11% in 2022 but remains below prepandemic levels, according to estimates by Cox Automotive based on wholesale auctions and default rates.