A First Look at Gen Z and Credit
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A First Look at Gen Z and Credit
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Introducing:
Kelley MotleyExperian
Natasha MadanExperian
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©Experian 3 June 2017
Generation overview
Gen Z
Age 18–20
Gen Y
Younger: Age 21–27
Older: Age 28–34
Gen X
Age 35–49
Boomer
Age 50–70
Silent
Age 70+
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Generational review
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©Experian 5 June 2017
The growth of Gen Z and Millennials
Gen Z
~86M (27%)
Gen YY
~31MM(10%)
Gen OY
~30MM(9%)
Gen X
~61M (19%)
Baby Boomers
~80M (25%)Silent
~28M (9%)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
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US
popu
lation
Age
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©Experian 6 June 2017
VantageScore® 3.0Model overview
A = Super-prime 781–850
B = Prime 661–780
C =Near prime 601–660
D = Sub-prime 500–600
F = Deep sub-prime 300–499
Predicts risk of borrower
• Likelihood of future serious delinquencies (90 days later or greater)
• Any type of account
24-month performance
Score range of 300–850
• Higher scores represent a lower likelihood of risk
• Lower scores are higher risk
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©Experian 7 June 2017
Average VantageScore® by generation
611 619641
687732
664653616 626
646692
730
666631 626 638 655
700730
673
Gen Z Young Millennial Older Millennial Gen X Boomer Silent Average
2012 2014 2016
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©Experian 8 June 2017
VantageScore® – Risk tiers
0%
10%
20%
30%
40%
50%
60%
70%
Gen Z Gen YY Gen OY Gen X Boomer Silent
Deep Subprime Subprime Near prime Prime Superprime
Gen Z subprime /
near prime will migrate
to prime / super prime
as they age
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©Experian 9 June 2017
$12,679
$65,473
$121,460
$225,691
$299,186
$129,030
Gen Z Gen YY Gen OY Gen X Boomer Silent
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Debt by risk tier
Extreme growth as
younger consumer
begin to build credit
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©Experian 10 June 2017
Percentage of debt by risk tier
5% 5% 7% 8% 9%
34% 35% 35% 35% 36%
15% 15% 15% 15% 15%
35% 34% 33% 32% 30%
12% 11% 11% 10% 9%
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Generation OY
1% 1% 1% 2% 2%
31% 33% 36% 38% 40%
21%21%
20%18% 17%
37% 35% 32% 30% 30%
10% 11% 11% 11% 11%
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Generation YY
1% 3% 5%
19%20% 17%
12%
19% 21%
19%
25%30%
48%
32%27%
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Generation Z
N/A N/A
Deep Subprime Subprime Near Prime Prime Super Prime
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©Experian 11 June 2017
Types of debt by generation
$0 $200 $400 $600
Gen Z
Gen YY
Gen OY
Gen X
Boomer
Silent
Debt ($s) Billions
STU RTA PIL HLC BCC AUA
$32B from STU, BCC, AUA
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Gen Z
Gen Y
Y
Gen O
Y
Gen X
Boom
er
Sile
nt
Deb
t ($
s)
Billi
on
s
Mortgage
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©Experian 12 June 2017
Thin files by generation
Gen Z and
Millennials’
files are getting
thicker over
time
99.3% 97.6% 94.7%
0.7% 2.4% 5.3%
2014 2015 2016
5.3%36.1%
63.9% 71.9% 77.3%61.6%
94.7% 63.9% 36.1% 28.1% 22.7% 38.4%
Gen Z Gen YY Gen OY Gen X Boomer Silent
Thick:
5 or more trades
Thin:
1-4 trades
56% 54%52%
49%46%
44% 46%48%
51%54%
2012 2013 2014 2015 2016
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©Experian 13 June 2017
Average Income InsightSM and Debt-to-income®
0%
20%
40%
60%
80%
100%
0%~10% 11%~20% 21%~30% 31%~40% 41%~50% 51%~60% 61%~70% 71%~80% 81%~90% 91%~100% >100%
Perc
en
t o
f co
nsu
mers
Debt-to-Income InsightSM
Average Debt-to-IncomeSM
Gen Z: 5.7% Gen X: 15.9%
Gen YY: 10.2% Boomers: 12.6%
Gen OY: 14.1% Silent: 5.7%
0%
10%
20%
30%
40%
50%
0-<25K 25K-< 35K 35K-< 45K 45K-<55K 55K-< 65K 65K-<75K 75K-<85K 85K-<99K 100K-<125K 125K-<150K 150K-<175K 175K-<200K 200K-<250K 250K+
Perc
en
t o
f co
nsu
mers
Average Income InsightSM
Gen Z: $33.8K Gen X: $84.9K
Gen YY: $41.6K Boomers: $102K
Gen OY: $60.5K Silent: $95.3K
Income InsightSM
85%
82%
84%
Gen Z Gen YY Gen OY
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©Experian 14 June 2017
29%
66%
2% 1%3%
41%
47%
4%2%
6%
40%37%
9%6%
9%
40%
30%
11%8%
11%
Revolver Transactor Rate Surfer Consolidator Mixed
Gen Z Gen YY Gen OY Gen X
Total Annual Plastics Spend (Experian TAPSSM)Type of spend
Average Experian TAPSSM
Gen Z: $9583.16
Gen YY: $9083.59
Gen OY: $13,143.63
Gen X: $19,759.33
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©Experian 15 June 2017
Bankcard balances and utilization
$1,574
$2,477
$4,451
$6,979
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
Balances
42.6%
43.5%
42.5%
41.6%
40.5%
41.0%
41.5%
42.0%
42.5%
43.0%
43.5%
44.0%
Utilization
Gen Z
Gen YY
Gen OY
Gen X
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©Experian 16 June 2017
Does interest rates matter to Gen Z / Millennials?
0%
3%
6%
9%
12%
15%
Gen Z Gen YY Gen OY Gen X
Mortgage interest rate
0%
3%
6%
9%
12%
15%
Gen Z Gen YY Gen OY Gen X
Revolving interest rate
0%
3%
6%
9%
12%
15%
Gen Z Gen YY Gen OY Gen X
Student loan interest rate
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©Experian 17 June 2017
Home lending trends
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©Experian 18 June 2017
Percentage of mortgage holders
0.3% 4.3%
19.3%
34.4%
39.2%
17.2%
0.4% 4.8%
23.3%
45.3%
56.9%
34.7%
0%
10%
20%
30%
40%
50%
60%
Gen Z Gen YY Gen OY Gen X Boomer Silent
Open Mortgage Open+Closed Mortgage
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©Experian 19 June 2017
Average mortgage payment nationwide
$908 $1,060
$1,438
$-
$500
$1,000
$1,500
$2,000
$2,500
All CA FL NY TX
Average payments
$104,468
$147,368
$196,651
$-
$100,000
$200,000
$300,000
$400,000
All CA FL NY TX
Gen Z Gen YY Gen OYAverage balances
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©Experian 20 June 2017
Average VantageScore® 3.0 for mortgage holders
0%
10%
20%
30%
40%
50%
60%
70%
Gen Z Gen YY Gen OY Gen X Boomer Silent
Deep Subprime Subprime Near Prime Prime Superprime
Avg. 675.3 689.3 707.5 705.4 724.4 680.7
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©Experian 21 June 2017
Auto trends
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©Experian 22 June 2017
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
Who contributes the largest to this growth?
Current age
Percentage of auto loan and lease growth by age
Gen YY Gen OY Gen XGen Z
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©Experian 23 June 2017
Auto loans vs. leases
0%
5%
10%
15%
20%
25%
30%
35%
40%
% With Auto Lease Trade % With Auto Loan Trade % With Both Auto Loan and Lease
Gen Z Gen YY Gen OY Gen X
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©Experian 24 June 2017
Average VantageScore® 3.0 for auto holders
0%
10%
20%
30%
40%
50%
60%
Gen Z Gen YY Gen OY Gen X Boomer Silent
Deep Subprime Subprime Near prime Prime Superprime
Avg 628.7 642.4 661.2 672.2 710.8 735.9
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©Experian 25 June 2017
Loan amounts for auto holders by generation
0%
5%
10%
15%
20%
25%
30%
Gen Z Gen YY Gen OY Gen X Boomer Silent
<5000 5001-10000 10001-15000 15001-20000 20001-25000 25001-30000
30001-35000 35001-40000 40001-45000 45001-50000 >50000
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©Experian 26 June 2017
Loan amounts by VantageScore® 3.0 bands
0%
5%
10%
15%
20%
25%
30%
Gen Z
0%
5%
10%
15%
20%
25%
30%
Gen YY
0%
5%
10%
15%
20%
25%
30%
Gen OY
Deep Subprime Subprime Near Prime Prime Super Prime
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©Experian 27 June 2017
Student lending trends
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©Experian 28 June 2017
Student loan growth relative to other credit types
0.0
0.3
0.5
0.8
1.0
1.3
1.5
1.8
2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4
Trilli
ons
Non-real estate outstanding debt
Retail Bank Card Auto Student
Change since 4Q-09
+74%
2016 Q4
$7.0
$8.0
$9.0
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4
Mortg
age ($
trillions)
Trilli
ons
Home equity outstanding debt
HE Loan HELOC Mortgage
Change since 4Q-09
-31%
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©Experian 29 June 2017
Average student loans and balances
2.5
4.24.5
3.6
2.8
2.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Gen Z Gen YY Gen OY Gen X Boomer Silent
4,381
8,842
13,074
18,30817,552
15,096
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Gen Z Gen YY Gen OY Gen X Boomer Silent
Average student loans Average balances
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©Experian 30 June 2017
Student loan delinquency rates percent balances
0%
2%
4%
6%
8%
10%
2009 2010 2011 2012 2013 2014 2015 2016
0.04% 0.1%0.2% 0.2%
0.3%
0.6%
0.20%
0.6%
0.9%
1.2%
1.0%1.1%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
Gen Z Gen YY Gen OY Gen X Boomer Silent
60 DPD 90 DPD
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©Experian 31 June 2017
How can we reach
Gen Z?
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©Experian 32 June 2017
My how the times have changed!
Where did you get your first credit? How did you get the credit exactly?
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©Experian 33 June 2017
What Gen Z / Millennials want
Make it
relevant
Appropriate
credit offers
Think
long-term
Honest
feedbackConsistency Trust
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©Experian 34 June 2017
How to bring them into YOUR strategy
Message with authenticity
Maintain a long-term vision
Connect them to something bigger
Provide education for financial literacy
Keep up with technological expectations
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