The Personal Loan Boom: What Financial Counseling Data Reveals

Tom De Poy | SVP of Industry Relations, Money Management International


Personal lending is having a remarkable year. According to TransUnion, outstanding personal loan balances reached a record $281 billion in the second quarter of 2026, while originations increased 19.5% year over year.

That growth reflects an important strength of our financial system. Access to responsibly underwritten credit helps people consolidate expensive debt, address unexpected expenses and pursue meaningful goals. But lending growth alone cannot tell us whether borrowers are becoming more financially secure.

At Money Management International (MMI), we see another part of this story through the experiences of people seeking financial counseling. And those experiences suggest an important question for lenders and financial wellness partners: When does additional credit improve a household’s financial position, and when does it simply postpone a difficult reckoning?

What financial counseling data reveals

During the first half of 2026, 45% of MMI’s new clients came to us with personal loan debt, a 10-percentage-point increase from 2020. The average personal loan balance among these clients was $18,870, up 11% from a year earlier.

We are also helping clients manage more than $1 billion in unsecured debt, primarily credit cards and personal loans, for the first time since 2013. September 2026 marked a 15-year high for debt management plan enrollment, and the number of active plans is at its highest level since 2017.

These figures deserve attention, but also context. MMI clients are people who have sought assistance with financial challenges; they are not representative of all personal loan borrowers. Our data does not show that personal loans caused their distress. It does show that these loans have become an increasingly common part of the debt picture for households asking for help.

Borrowing as a solution—or as a stopgap

Personal loans can serve very different purposes. A borrower who uses a fixed-rate loan to replace more expensive revolving debt, while avoiding new balances, may strengthen their financial position. A household that borrows to cover an ongoing gap between income and essential expenses faces a different challenge: The loan may provide immediate relief without addressing the underlying shortfall.

That distinction matters in an economy where the cumulative rise in living costs continues to pressure household budgets. Medical bills, transportation expenses, home repairs and other necessities can strain even carefully managed finances. Financial difficulty is rarely explained by one purchase or one financial decision.

National credit data likewise calls for nuance. TransUnion reported that personal loan originations rose 19.5% year over year, with growth among both subprime and super-prime borrowers. Its second-quarter report also showed the borrower-level 60-plus-day delinquency rate rising to 3.81%, from 3.37% a year earlier. Credit expansion and emerging repayment stress can occur at the same time.

What lenders and partners can do

For financial institutions, the takeaway should not be to retreat from personal lending. Responsible access to credit remains essential. Rather, it is an opportunity to look beyond origination volumes and account performance to consider whether a customer’s overall obligations are sustainable.

A few practical approaches stand out: make financial wellness resources visible before a customer reaches a crisis; recognize repeated consolidation or persistent reliance on borrowing as potential signals that additional support may help; and establish pathways to trusted, nonprofit financial counseling when repayment challenges begin to surface.

These efforts can complement sound underwriting and servicing practices. They also recognize that consumers may need different solutions at different stages: budgeting guidance, a manageable repayment strategy, creditor assistance or a broader review of available options.

At MMI, we regularly meet people who have already tried to solve a difficult debt situation on their own. Earlier engagement can preserve more choices and reduce the stress of waiting until accounts are severely delinquent or collections begin.

The personal loan boom is a useful reminder that credit availability and financial resilience are not the same thing. The industry has an opportunity to measure success not only by how much credit is extended, but also by whether consumers are making sustainable progress.

That is a goal lenders, financial counselors, and consumers can share.

Sources: TransUnion, Q2 2026 Consumer Credit Industry Insights Report; MMI aggregated client counseling and debt management data

Tom DePoy, Senior Vice President of Industry Relations for MMI
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