SoFi's success could boil down to just one letter

By Emily Bary

One analyst sees a 'K-shaped economy,' in which premium borrowers are doing well while lower-income borrowers struggle. SoFi's focus on credit quality stands out in this environment.

SoFi's personal-loan net charge-offs were at their lowest level in more than two years during the September quarter.

SoFi Technologies Inc. is having a strong year that's at odds with the performances of other lending companies. The divergence could perhaps be summed up with a single letter: K.

That's a reference to a K-shaped economy, which Mizuho analyst Dan Dolev said could be taking place. The term refers to an economy in which higher-income households see upbeat momentum, while lower-income earners struggle.

See more: Cracks are now showing up in credit markets. Here's how investors should view them.

SoFi's (SOFI) credit trends were on display Tuesday when the financial-technology company posted its latest results. The company said personal-loan net charge-offs were at their lowest level in more than two years, while the on-balance sheet 90-day delinquency rate in both personal and student lending "remained consistent with the prior quarter," with just 1 basis point of uptick.

SoFi lends to a relatively premium customer base, and that emphasis seems to be paying off for the company, according to Dolev. He said SoFi is "a clear winner of the K-Economy where higher FICO bands remain relatively insulated from credit woes."

SoFi shared on the earnings call that its personal-lending borrowers have a weighted-average income of $157,000 and a weighted-average FICO score of 745. Student-loan customers have a weighted average income of $157,000 and a weighted average FICO score of 773.

Dolev said SoFi's sequential growth in originations across personal lending, student lending and home loans "shows a high confidence in future performance as well."

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By contrast, Dolev noted that delinquencies "are particularly elevated across the lower FICO bands like 660-719," and some subprime auto lenders have come under pressure.

Shares of SoFi have doubled so far in 2025, while shares of LendingClub, which caters to a broader base of customers, are up just 9%.

SoFi's management emphasized its focus on higher-quality loans on the earnings call.

"Recently, as some concerns have emerged within the private-credit markets, we've actually seen our LPB partners lean in to do more with SoFi, not less, reflecting a flight to quality and durability through interest-rate and economic cycles," Chief Executive Anthony Noto said, referring to the company's loan-platform business.

He cited SoFi's "unique skills in underwriting, marketing, pricing, insights and data" that have helped the company benefit "from this flight to quality."

"The health of our consumer remains strong and our credit continues to improve," CFO Christopher Lapointe added.

-Emily Bary

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10-29-25 1126ET