a first look at gen z and credit - experianf = deep sub-prime 300–499 predicts risk of borrower...

A First Look at Gen Z and Credit

©Experian 2 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+

Generational review


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

0 2 4 6 8

10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

10

0

US

po

pula

tion

Age


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


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


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


$12,679

$65,473

$121,460

$225,691

$299,186

$129,030


Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

Debt by risk tier

Extreme growth as

younger consumer

begin to build credit


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%


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%


Generation YY

1% 3% 5%

19%20% 17%

12%

19% 21%

19%

25%30%

48%

32%27%


Generation Z

N/A N/A

Deep Subprime Subprime Near Prime Prime Super Prime


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

YY

Gen

OY

Gen

X

Boo

me

r

Sile

nt

Deb

t ($

s)

Bil

lio

ns

Mortgage


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%


Thick:

5 or more trades

Thin:

1-4 trades

56% 54%52%

49%46%

44% 46%48%

51%54%

2012 2013 2014 2015 2016


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%

Pe

rce

nt

of

co

nsu

me

rs

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+

Pe

rce

nt

of

co

nsu

me

rs

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


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


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


Does interest rates matter to Gen Z / Millennials?

0%

3%

6%

9%

12%

15%


Mortgage interest rate

0%

3%

6%

9%

12%

15%


Revolving interest rate

0%

3%

6%

9%

12%

15%


Student loan interest rate


Home lending trends


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%


Open Mortgage Open+Closed Mortgage


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


Average VantageScore® 3.0 for mortgage holders

0%

10%

20%

30%

40%

50%

60%

70%


Deep Subprime Subprime Near Prime Prime Superprime

Avg. 675.3 689.3 707.5 705.4 724.4 680.7


Auto trends


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


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



Average VantageScore® 3.0 for auto holders

0%

10%

20%

30%

40%

50%

60%


Deep Subprime Subprime Near prime Prime Superprime

Avg 628.7 642.4 661.2 672.2 710.8 735.9


Loan amounts for auto holders by generation

0%

5%

10%

15%

20%

25%

30%


<5000 5001-10000 10001-15000 15001-20000 20001-25000 25001-30000

30001-35000 35001-40000 40001-45000 45001-50000 >50000


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


Student lending trends


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

on

s

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

Mo

rtga

ge

($ trillio

ns)

Trilli

on

s

Home equity outstanding debt

HE Loan HELOC Mortgage

Change since 4Q-09

-31%


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


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


Average student loans Average balances


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%


60 DPD 90 DPD


How can we reach

Gen Z?


My how the times have changed!

Where did you get your first credit? How did you get the credit exactly?


What Gen Z / Millennials want

Make it

relevant

Appropriate

credit offers

Think

long-term

Honest

feedbackConsistency Trust


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

a first look at gen z and credit - experianf = deep sub-prime 300–499 predicts risk of borrower...

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