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More Americans are falling behind on their credit card and mortgage payments, and they’re increasingly not just from lower income brackets.

A new report by the National Foundation for Credit Counseling reveals that serious financial strain is now advancing past the lowest-income borrowers, as reported by the Wall Street Journal. The NFCC report cited by WSJ showed that while credit counseling agencies are used to helping those with lower incomes, they’re now seeing a shift in clientele, and those with higher incomes are seeking aid more and more.

Today, the average client looking for credit counseling brings in an income of about $70,000 per year, with unsecured debt levels at around 50% of their annual income. What’s also alarming is that the income level of the average person seeking credit counseling help has increased by 75% since pre-pandemic. Before COVID-19, the typical client made closer to $40,000 per year with unsecured debt at around 25% of their annual income.

“We are seeing a disturbing shift from discretionary debt to survival debt,” NFCC CEO Mike Croxson told WSJ. In other words, more people are using credit to stay afloat than spend on discretionary buys. Croxson added that the increasing number of missed payments by existing credit counseling clients is also sending red flags: their payment plans are tailored to their incomes and supposed to be manageable. If those clients can’t afford to pay en masse, something is going very wrong. 

Auto, mortgage, credit card, and student loan delinquencies have all increased over the past handful of years, per Federal Reserve Bank of New York data. Student loan delinquencies have spiked the most compared to other types of loan delinquencies.

This financial trend comes as the job market continues prove weak if not stagnant, with recent announced job cuts reaching near-Great Recession levels and Black unemployment nearly 70% higher than the average rate. There’s also been an increase in U.S. household debt in some kind of delinquency. According to the Federal Reserve Bank of New York, the share of loans that are at least 30 days delinquent is at the highest level it has been since 2017. 

Credit counselors like Croxson warn that even with marginal gains in the job market, economic fragility is still advancing in many U.S. households, and not just low-income ones anymore. More borrowers are seeking help, and more help-seeking borrowers are falling behind on their bills and loans. 

“When the financial buffer runs out, the climb in stress isn’t gradual,” Croxson told WSJ. “It’s vertical.”

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