A record 38% of consumers now hold a personal loan, with total balances reaching nearly $598 billion - a 7.6% rise from the previous year, according to a February 2026 report from Experian on personal loans. Additionally, the proportion of consumers with personal loans has consistently grown each year since 2017.
Dr. Andrada Pacheco, Chief Data Scientist at VantageScore, advises consumers to be intentional with their borrowing, prioritizing making consistent payments and avoiding actions that will damage their credit score.
“Higher balances increase utilization and repayment pressure. Avoid applying to multiple lenders at once, as too many hard inquiries in a short time can temporarily lower your score,” said Dr. Pacheco.
Consumers should also avoid taking out personal loans when doing so could hurt their credit more than help it.
“If you have unstable income or if there’s any doubt about making consistent payments, that’s a red flag. Using a personal loan to cover everyday expenses can signal a deeper budgeting issue and lead to a debt cycle. Don’t use loans for investments or risky opportunities as they can backfire, and [opt for] cheaper options like 0% APR credit cards or payment plans that are less risky if managed well,” added Dr. Pacheco.
Read the full MarketWatch article.
