By Ray Birch
SAN ANTONIO—For decades, credit unions have wrestled with the same stubborn question: how do you bring younger members into a cooperative system built largely around older generations?
The answers have evolved with each generation. Branch redesigns gave way to mobile apps. Financial education seminars became TikTok videos. Core processors were upgraded, chatbots deployed, and sleek digital wallets rolled out—all in the name of attracting Gen Z and younger Millennials.
Yet despite the industry’s growing digital sophistication, many credit unions may be undermining their own youth strategy in a far more basic way: they aren’t giving young members access to credit, one analyst points out.
“Everybody talks about digital as the answer,” said Brian Scott, co-founder of RAI Partners. “But if you don’t give a younger member a credit card, none of that digital effort matters.”
The Digital Assumption
There is little debate that younger consumers expect strong digital experiences. They want intuitive apps, instant payments, frictionless onboarding, and real-time alerts. Credit unions, well aware of this, have poured resources into technology stacks designed to compete with megabanks and fintechs alike, Scott noted.
But the longtime payments expert said the industry often assumes digital tools alone will win young members’ loyalty—without addressing whether those members can actually access foundational financial products.
“You hear it all the time: ‘We need better digital to attract younger members,’” Scott said. “But these consumers don’t care how good your digital tools are if you won’t even approve them for a card.”
The Credit Catch-22
The challenge is underwriting, noted Scott.
Many Gen Z members and younger Millennials simply don’t fit traditional credit models. The average Gen Z consumer carries a FICO score in the mid-650s to low-660s, Scott noted—below the threshold many credit card programs are willing to approve. Even Millennials, with average scores around 690, often sit right at the edge of credit unions’ comfort zones.
The result: younger members are routinely declined not because they are risky borrowers, but because they lack credit history altogether.
“Of course they don’t have great FICO scores,” Scott said. “They haven’t had credit long enough. But most lending policies treat someone with one year of credit the same as someone with 30 years of credit—and that tells you very different things.”
That one-size-fits-all underwriting approach, he said, is quietly closing the door on the very demographic credit unions say they want to serve.
Losing The First-Mover Advantage
When young members are denied credit, they don’t simply walk away from borrowing—they go elsewhere, reminded Scott. And, often, that means to large national banks.
“If a credit union doesn’t give them a card, they’re going to Chase or Citi,” Scott said. “And once that happens, you’ve probably lost them for a long time.”
The irony is that younger members may be more loyal than they are often given credit for—especially to the institution that helps them first, Scott said.
“The first card someone gets really matters,” Scott said. “A lot of people keep that card for years, even decades. I still have the first card I got as a teenager. I don’t use it much anymore, but I still have it.”
That first-mover advantage can shape long-term financial relationships, he added, challenging the narrative that younger consumers are inherently disloyal.
“I don’t buy the idea that younger members aren’t loyal,” Scott said. “They’re loyal to the first institution that actually gives them access.”
Rethinking Youth Lending
Scott said credit unions that are serious about building a younger membership base need to rethink their approach in three key areas.
First, lending policies must reflect life stage, not just credit score.
“A 620 score after 30 years of credit history tells you something very different than a 620 score after 12 months,” he said. “You have to design policies that recognize that difference if you want young people in the door.”
Second, access to credit must be paired with education—not just digital features.
Financial counseling, credit-building tools, and real-time guidance often matter more than flashy app functionality. Tools that show how payment behavior affects credit scores, for example, can help young members build financial health while deepening engagement, Scott explained.
“Teaching them how to use credit responsibly gets ignored far too often,” Scott said. “Everyone’s focused on the app, not on helping members actually succeed with the product.”
Brian Scott
Third, rewards and incentives must match the demographic.
“Younger members don’t care about airline lounge access,” he said. “Rewards have to fit where they are in life, not where a 45-year-old cardholder is.”
Sharing Risk—Without Losing the Member
Some credit unions, Scott said, are finding ways to extend credit to younger members without absorbing all of the risk themselves.
RAI Partners works with credit unions to support card programs for members who fall below traditional underwriting thresholds. The credit union retains the member relationship, while the card relationship—the credit risk and card support—operate behind the scenes at RAI.
“The member doesn’t see a transfer. They stay with their credit union,” Scott said. “What changes is how the risk is managed.”
Over time, those members can “graduate” into the credit union’s own card program as their credit profiles improve—preserving continuity while expanding access, Scott explained.
The broader point, Scott emphasized, isn’t about outsourcing, but about refusing to let underwriting rigidity derail long-term growth.
“You can’t say you want younger members and then not lend to them,” he said. “Those two things don’t work together.”
Beyond The Buzzwords
As credit unions continue to modernize, Scott believes the industry needs to balance innovation with fundamentals.
Digital tools matter. Seamless experiences matter. But access to credit—especially early credit—may matter more than anything else, he said.
“You can spend millions on digital,” Scott said. “But if a young member applies for a card and gets declined, that’s the end of the relationship. All the whiz-bang stuff doesn’t matter anymore.”