Two thirds of the cohort aged 18 or older are credit active
The sizeable share of the US population that was born since 1995 (32%) is emerging as a generation with no problem living on credit.
A new report from Transunion shows that 8% of the Generation Zs in the US are over 18 and of these 66% are credit active. Of the six nations selected for the study (which also includes Canada, Colombia, Hong Kong, India, and South Africa), the US leads for credit active Gen Zs with Canada the only country to come close (63%).
Half of credit active US Gen Z adults have a credit card while 39% have a student loan, 25% an auto loan, 23% have a private label card, and 4% have a personal loan.
The fastest growing credit product among this cohort though is mortgages at 52% followed by home equity lines of credit at 45%. Personal loan, bankcard, and auto loan complete the top 5 in this regard.
“Gen Z is the first generation of digital natives, and they have come to expect a seamless consumer experience across all walks of life – including how they access, use and manage credit,” said Jason Laky, executive vice president and head of financial services at TransUnion. “Our belief is that the desire for credit among this generation is significant across the board and improving economic conditions will likely serve as a springboard for more credit, especially in emerging credit markets. It’s critical for lenders in both emerging and established economies to have the ability to make more informed decisions on prospective customers and earn their trust as well as their business.”
Creditworthy
The report shows that, not only are Gen Zs credit active, they are also creditworthy; 50% of them are prime and above (compared to 39% of Millennials when they were the same age).
However, 23% of Gen Z who are subprime have a credit card, almost double the 12% of Millennials who were in the same position at the same age.
“The oldest set of Gen Z consumers came of age during an elongated economic expansion and relaxed underwriting environment, which allowed for a comparatively easier entrance into the credit market than their Millennial counterparts,” said Matt Komos, vice president of U.S. research and consulting for TransUnion. “Gen Z has been able to access credit cards and auto loans with greater ease, particularly because lenders have been extending their buy-box into non-prime – which has been beneficial to these Gen Z consumers as they enter the credit market.”
