AUSTIN, Texas– A new study offers some updated insights into the borrowing habits and credit outlook for Millennials and Gen Zers.
The study, conducted by Open Lending and TransUnion used data from more than four-million U.S. consumers and examines new-to-credit borrowers’ upward credit trajectory with insights into lending patterns and preferences, according to the two companies.
The Key Findings
Open Lending and TransUnion said key findings include:
- Millennials and Gen Zers are poised and quick to advance. Data revealed that 30% of Millennial and Gen Z thin-file consumers moved up credit tiers within two years compared to 22% of Gen X or older thin-file consumers.
- Younger consumers are loyal consumers. “Two out of every five Millennial and Gen Z thin-file consumers who received an automotive loan at a bank or credit union returned to the same type of financial institution for their next product and often with a higher credit score than returning thin-file consumers from older cohorts.”
- Automotive loans are a priority. “Demand for automotive loans is unlikely to dissipate, as 74% of consumers who open an automotive trade line as their second product are replacing an existing vehicle or adding an additional vehicle,” the companies said.
‘Immense Potential’
“Many financial institutions are hesitant to extend loans to borrowers with thinner credit files and lower credit scores, who are often Millennials and Gen Zers,” said Kevin Filan, SVP-marketing with Open Lending. “However, this strategic consumer segment shows immense potential for upward credit mobility compared to their older counterparts. The financial institutions that intelligently address these ‘emerging prime’ borrowers through comprehensive data analysis and decisioning can generate higher-yielding loan opportunities and long-term customer loyalty.”
The full report can be found here.
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