Rising Delinquencies in 2026: What Credit Leaders Need to Do Before the Numbers Continue to Move

By: Nick Cherry, Divisional CEO at Phillips & Cohen Associates, Ltd.

I spend a lot of time with credit and collections teams who see tension in the data. On the surface, delinquency rates look manageable and portfolio performance appears stable. Underneath, pressure is building. Household leverage keeps climbing and savings buffers have thinned, so more customers stretch each billing cycle just to stay current.

Total U.S. household debt reached about $18.6 trillion in the third quarter of 2025, with credit card balances at a record level on top of rising mortgage, auto, and student loan balances. At the same time, St. Louis Fed analysis shows that the share of people delinquent on credit card debt has continued to rise through early 2025, and that the trend is broad across geographies and measures even where the growth rate has slowed. Taken together, those signals point toward a new wave of early-stage delinquencies in 2026, even if today’s headline numbers look benign. This is the window to prepare.

The Hidden Financial Pressures Behind the Next Delinquency Wave

When I talk with lenders, agencies, and technology providers, I start with the consumer’s cash flow reality. Many households that built savings during the pandemic have now depleted that buffer. Wage growth has not kept pace with the cost of housing and transportation in many markets. There are also signs of delinquency rates building across higher wage earners as parts of the economy continue to tighten with resultant job losses. 

On top of that, interest rates are higher and revolving balances are larger. Consumers who once paid in full now roll over, while prior revolvers face minimums that absorb more of each paycheck. For many customers, the issue is not whether they’re willing to pay but the basic math; the budget no longer stretches across the month. That is why the next wave of risk is likely to appear first in early-stage delinquency as people juggle which bills can slide for a cycle.

Early Warning Behaviors That Signal 2026 Risk

The clearest signals in this subject matter today lean more toward behavioral than purely score-based. Rising utilization is one. When many accounts sit above 80% of their limit and stay there, that looks like structural strain, not opportunistic borrowing. A move from statement balance payments to minimum or near-minimum patterns, especially among customers who historically paid more aggressively, often precedes a missed payment by several cycles.

Hardship and relief program usage provide another warning. Growth in enrollment, repeat use, or longer durations tells you that customers rely on structured forbearance to stay current. Those programs initially suppress delinquency but reveal a fading resilience over time. The same stress can be seen in rising requests for due date changes, split payments across pay periods, or short extensions after payday.

If specialists rely mainly on traditional score-based models, those behavioral signals are often underweighted or missed entirely, which is why they can mask the true build-up in early-stage 2026 risk.

How Repayment Trends Are Reshaping Credit Priorities

These behaviors are already changing how forward-looking credit leaders set priorities. Historically, many organizations leaned heavily on static metrics like delinquency buckets and bureau scores. Those measures still matter, but they no longer tell the whole story, especially for lower-income and younger borrowers who bear a disproportionate share of today’s credit card delinquency burden even when portfolio-level averages look acceptable.

The most resilient organizations I work with treat real-time behavior as a primary risk signal. Changes in payment pattern, hardship usage, and contact preferences sit alongside bureau triggers instead of beneath them. There is also a shift in belief and philosophy. Leading teams view early engagement with stressed but still current customers as a relationship investment instead of a pure loss mitigation exercise, with a focus on proactive offers, empathetic communication, appropriate forbearance and digital self-service.

Operational Steps Credit Leaders Should Take Now

No one can wait for a perfect forecast. We need a roadmap that strengthens resilience across the credit ecosystem.

For credit and collections pros, I suggest modernizing your engagement stack. Customers under stress avoid voice calls and traditional letters. Often, they look for clear digital options that match how they already manage money, such as secure portals and mobile messaging that make it easy to understand options and commit to a more realistic plan.

Close the gaps between lenders and agencies. Sometimes, agencies work from stale or incomplete data, which limits their ability to tailor outreach and can create compliance exposure, including avoidable disputes and regulatory scrutiny.

Prioritize near real-time data sharing on hardship status, recent contacts, dispute history, and preferred channels so every party works from the same accurate picture of the consumer.

Update your segmentation models to reflect current repayment habits. Incorporate leading indicators such as sustained high utilization, progressive payment compression, hardship program behavior, and flexibility requests. Build strategies that distinguish between customers who face a temporary disruption and those whose budgets no longer support existing terms.

Designing Repayment Structures That Reflect How Consumers Actually Get Paid

Expanding the menu of payment options in a way that aligns with regulatory expectations and consumer reality also significantly helps. That can include flexible due dates tied to pay cycles, lower initial payments that step up over time, or structured installment plans that simplify complex balances. The goal is a realistic path that allows more customers to succeed and keeps more relationships intact.

The next delinquency wave is no longer theoretical. The leverage already sits on the books, and the stress is visible in customer behavior. Credit leaders who act now can enter 2026 with stronger recovery performance and better compliance protection, while also demonstrating a more consumer-aligned approach through a tougher cycle.