millennial credit: the insights you've been missing
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© 2015 Experian Information Solutions, Inc. All rights reserved. Experian and the Experian marks used herein are trademarks or registered trademarks
of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.
No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian.
Experian Public.
Millennial credit The insights you’ve been missing
Michele Raneri Vice President Analytics and Business Development
2 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
The Millennial explosion
3 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Agenda Trends The millennial generation and key credit trends
Cohorts Point-in-time cohort comparison study and behavior generational differences
Entrepreneurs Key indicators on millennial small business owners
Segmentation Tools to effectively attract, maintain and retain the most profitable populations
3 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Millennial credit: The insights you’ve been missing
4 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
5 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Generational review
Gen Y /
Millennials
Gen X /
Busters
Baby
Boomers
Greatest /
Silent
Range: 69+
17% file Average age: 81
Range: 50-68
27% file Average age: 58
Range: 35-49
22% file Average age: 42
Range: 18-34
21% file Average age: 27
12% unknown
6 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Generational review
Gen Y /
Millennials
Gen X /
Busters
Baby
Boomers
Greatest /
Silent
Range: 69+
17% file Average age: 81
Range: 50-68
27% file Average age: 58
Range: 35-49
22% file Average age: 42
Range: 18-34
21% file Average age: 27
But… Millennials are now also the largest generation,
numbering more than 75 million 12% unknown
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Experian Public.
Millennials timeline
Graduate high
school
Barista
Coachella College
Travel more
Travel Move home
Apartment in Austin
Follow their passion
Credit
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Experian Public.
world of credit?
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Experian Public.
So, how
does this
translate in the
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Experian Public.
3
17
28
-
5
10
15
20
25
30
35
Bankcard Auto Student
Th
ou
sa
nd
s
185
-
50
100
150
200
Mortgage
Th
ou
sa
nd
s
Average balance per millennial
10 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Cohort comparison – Average balance for Gen X Age 30 vs Gen Y Age 30
1
5
16
21
1
4
18
34
-
5
10
15
20
25
30
35
40
Retail Bankcard Auto Student
Th
ou
sa
nd
s
Gen X - Age 30 (2005) Gen Y - Age 30 (2015)
163
185
150
160
170
180
190
Mortgage
Th
ou
sa
nd
s
10 year look back
Gen X
Age 40
2015
Gen X
Age 30
2005
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Experian Public.
VantageScore® by generation 2011-15
540
560
580
600
620
640
660
680
700
720
740
760
Millennials Gen X Boomer Greatest
2011 2012 2013 2014 2015
Growth with new entrants
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Experian Public.
VantageScore® comparison
7%
27%
16%
32%
18%
10%
31%
15%
34%
10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Deep subprime 300-499
Subprime 500-600
Nonprime 601-660
Prime661-780
Super prime781-850
Gen X Gen YFull population Sep 2015 Experian MAD file
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Experian Public.
160
165
170
175
180
185
190
195
-
5
10
15
20
25
30
35
2012 2013 2014 2015
Mo
rtg
ag
e
Th
ou
sa
nd
s
Auto Bankcard Student Mortgage
Millennial average balance comparison
Millennials
160
165
170
175
180
185
190
195
-
5
10
15
20
25
30
35
2012 2013 2014 2015
Mo
rtg
ag
e
Th
ou
sa
nd
s
US +12%
+19%
+15%
+15%
+14%
+3%
+13%
+2%
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Experian Public.
Delinquency comparison 60DPD
60DPD
Delinquency Rate
June 2015 US
Millennials
Mortgage 0.6% 0.8%
Auto 0.6% 0.8%
Bankcard 0.5% 0.6%
Student 0.5% 0.5%
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Experian Public.
Where are Millennials going financially? Forecasted growth through 2020
17
29
6
10
30
43
79
137
$0
$20
$40
$60
$80
$100
$120
$140
$160
$0
$10
$20
$30
$40
$50
2012 2013 2014 2015 2016 2017 2018 2019 2020
Bil
lio
ns
Bil
lio
ns
Auto Bankcard Student Mortgage
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Experian Public.
How Millennial business owners compare Student loan payments and balances
$0
$50
$100
$150
$200
$250
$300
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Millennial Gen X Baby Boomers Greatest / Silent
Th
ou
sa
nd
s
Average Student Loan Balance Average Student Loan Payment
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Experian Public.
Education levels of Millennial business owners
0%
5%
10%
15%
20%
25%
30%
35%
40%
Less than a highschool diploma
High schooldiploma
Some college Bachelor degree Graduate degree
Gen Y / Millennials Gen X Baby Boomers Greatest / Silent
Gen Y represents largest % of business owners with less than a high school diploma
Gen Y represents smallest % of business owners with less than a bachelors degree
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Experian Public.
Top industries for Millennial business owners
0%
1%
2%
3%
4%
5%
6%
7%
Business Services Building Cleaning General Contractors Motion Picture / Video
% o
f s
am
ple
Millennial Gen X Baby Boomers Greatest/Silent
• Of the top 10 small business SICs Millennials are prominent in 4.
• Males are building small businesses that don’t require 4 year degrees.
• Millennials are noticeably absent from 3 of the top 10: real estate, consulting and gift/novelty.
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Experian Public. 19 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Who to target?
Risk and revenue analysis for bankcard
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Experian Public.
The approach
to highlight the most predictive risk levers
in order to define the revenue breaks
to segment population for decisioning
Targeting… the ideal
Millennial
Chi-square analysis
Revenue calculation
Merge revenue and risk
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Experian Public.
Targeting the ideal Millennial Step 1
to highlight the most predictive risk levers
in order to define the revenue breaks
to segment population for decisioning
Predict risk
Chi-square analysis
Revenue calculation
Merge revenue and risk
22 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Predicting risk
Vantage
Score®
Experian
TAPSSM
Trend ViewSM
attributes
Premier
AttributesSM
ERIC for
RevolvingSM
Debt-to-Income
InsightSM
CHAID analysis
LOW likelihood of bad
HIGH likelihood
of bad
Observation September 2013
Performance September 2015
Bad definition 90 DPD
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Experian Public.
CHAID results Gen Y Probability 90+DPD
Subprime
(4.7%)
BC Utiliz <10%
(3.2%)
BC Utiliz 10-49%
(3.7%)
BC Utiliz 50%+
(4.8%)
Delinq 1+
(3.2%)
Delinq 1+
(4.9%)
Never Delinq
(3.7%)
Delinq 1+
(3.7%)
BC Utiliz <10%
(2.2%)
BC Utiliz 10-49%
(2.0%)
BC Utiliz 50%+
(2.2%)
Delinq 1+
(2.3%)
Delinq 1+
(2.4%)
Never Delinq
(1.7%)
Delinq 1+
(2.2%)
Never Delinq
(1.2)
Nonprime
(2.3%)
BC Utiliz <10%
(0.1%)
BC Utiliz 10-49%
(0.1%)
BC Utiliz 50%+
(0.7%)
Delinq 1+
(0.2%)
Never Delinq
(0.1%)
Delinq 1+
(0.0%)
Never Delinq
(0.7%)
Delinq 1+
(0.1%)
Never Delinq
(0.1%)
Super Prime
(0.2%)
BC Utiliz <10%
(0.3%)
BC Utiliz 50%+
(0.8%)
Delinq 1+
(0.5%)
Never Delinq
(0.2%)
Delinq 1+
(1.1%)
Never Delinq
(0.6%)
Prime
(0.8%)
BC Utiliz 10-49%
(0.4%)
Delinq 1+
(0.7%)
Never Delinq
(0.2%)
BC Utiliz <10%
(3.8%)
Delinq 1+
(3.8%)
Delinq 1+
(7.3%)
Delinq 1+
(5.7%)
Deep
Subprime
(7.0%)
BC Utiliz 10-49%
(5.7%)
BC Utiliz 50%+
(7.3%)
1.2% overall
bankcard bad rate
Never Delinq
(10.5%)
Never Delinq
(4.2%)
Never Delinq
(1.0%)
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Experian Public.
CHAID results Gen Y Probability 90+DPD
Subprime
(4.7%)
BC Utiliz <10%
(3.2%)
BC Utiliz 10-49%
(3.7%)
BC Utiliz 50%+
(4.8%)
Delinq 1+
(3.2%)
Delinq 1+
(4.9%)
Never Delinq
(3.7%)
Delinq 1+
(3.7%)
BC Utiliz <10%
(2.2%)
BC Utiliz 10-49%
(2.0%)
BC Utiliz 50%+
(2.2%)
Delinq 1+
(2.3%)
Delinq 1+
(2.4%)
Never Delinq
(1.7%)
Delinq 1+
(2.2%)
Never Delinq
(1.2)
Nonprime
(2.3%)
BC Utiliz <10%
(0.1%)
BC Utiliz 10-49%
(0.1%)
BC Utiliz 50%+
(0.7%)
Delinq 1+
(0.2%)
Never Delinq
(0.1%)
Delinq 1+
(0.0%)
Never Delinq
(0.7%)
Delinq 1+
(0.1%)
Never Delinq
(0.1%)
Super Prime
(0.2%)
BC Utiliz <10%
(0.3%)
BC Utiliz 50%+
(0.8%)
Delinq 1+
(0.5%)
Never Delinq
(0.2%)
Delinq 1+
(1.1%)
Never Delinq
(0.6%)
Prime
(0.8%)
BC Utiliz 10-49%
(0.4%)
Delinq 1+
(0.7%)
Never Delinq
(0.2%)
BC Utiliz <10%
(3.8%)
Delinq 1+:
(3.8%)
Delinq 1+
(7.3%)
Delinq 1+
(5.7%)
Deep
Subprime
(7.0%)
BC Utiliz 10-49%
(5.7%)
BC Utiliz 50%+
(7.3%)
1.2% overall
bankcard bad rate
Never Delinq
(10.5%)
Never Delinq
(4.2%)
Never Delinq
(1.0%)
Nonprime segment
Have NEVER been
delinquent on any
trades
This node has a
lower bad rate than the
average bad rate
Treatment:
Protect or attract
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Experian Public.
CHAID results Gen Y Probability 90+DPD
Subprime
(4.7%)
BC Utiliz <10%
(3.2%)
BC Utiliz 10-49%
(3.7%)
BC Utiliz 50%+
(4.8%)
Delinq 1+
(3.2%)
Delinq 1+
(4.9%)
Never Delinq
(3.7%)
Delinq 1+
(3.7%)
BC Utiliz <10%
(2.2%)
BC Utiliz 10-49%
(2.0%)
BC Utiliz 50%+
(2.2%)
Delinq 1+
(2.3%)
Delinq 1+
(2.4%)
Never Delinq
(1.7%)
Delinq 1+
(2.2%)
Never Delinq
(1.2)
Nonprime
(2.3%)
BC Utiliz <10%
(0.1%)
BC Utiliz 10-49%
(0.1%)
BC Utiliz 50%+
(0.7%)
Delinq 1+
(0.2%)
Never Delinq
(0.1%)
Delinq 1+
(0.0%)
Never Delinq
(0.7%)
Delinq 1+
(0.1%)
Never Delinq
(0.1%)
Super Prime
(0.2%)
BC Utiliz <10%
(0.3%)
BC Utiliz 50%+
(0.8%)
Delinq 1+
(0.5%)
Never Delinq
(0.2%)
Delinq 1+
(1.1%)
Never Delinq
(0.6%)
Prime
(0.8%)
BC Utiliz 10-49%
(0.4%)
Delinq 1+
(0.7%)
Never Delinq
(0.2%)
BC Utiliz <10%
(3.8%)
Delinq 1+:
(3.8%)
Delinq 1+
(7.3%)
Delinq 1+
(5.7%)
Deep
Subprime
(7.0%)
BC Utiliz 10-49%
(5.7%)
BC Utiliz 50%+
(7.3%)
1.2% overall
bankcard bad rate
Never Delinq
(10.5%)
Never Delinq
(4.2%)
Never Delinq
(1.0%)
Nonprime segment
Have NEVER been
delinquent on any
trades
This node has the
average bad rate, they are on
the cusp and a
decision would need
to be made
Treatment:
Watch
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Experian Public.
CHAID results Gen Y Probability 90+DPD
Subprime
(4.7%)
BC Utiliz <10%
(3.2%)
BC Utiliz 10-49%
(3.7%)
BC Utiliz 50%+
(4.8%)
Delinq 1+
(3.2%)
Delinq 1+
(4.9%)
Never Delinq
(3.7%)
Delinq 1+
(3.7%)
BC Utiliz <10%
(2.2%)
BC Utiliz 10-49%
(2.0%)
BC Utiliz 50%+
(2.2%)
Delinq 1+
(2.3%)
Delinq 1+
(2.4%)
Never Delinq
(1.7%)
Delinq 1+
(2.2%)
Never Delinq
(1.2)
Nonprime
(2.3%)
BC Utiliz <10%
(0.1%)
BC Utiliz 10-49%
(0.1%)
BC Utiliz 50%+
(0.7%)
Delinq 1+
(0.2%)
Never Delinq
(0.1%)
Delinq 1+
(0.0%)
Never Delinq
(0.7%)
Delinq 1+
(0.1%)
Never Delinq
(0.1%)
Super Prime
(0.2%)
BC Utiliz <10%
(0.3%)
BC Utiliz 50%+
(0.8%)
Delinq 1+
(0.5%)
Never Delinq
(0.2%)
Delinq 1+
(1.1%)
Never Delinq
(0.6%)
Prime
(0.8%)
BC Utiliz 10-49%
(0.4%)
Delinq 1+
(0.7%)
Never Delinq
(0.2%)
BC Utiliz <10%
(3.8%)
Delinq 1+:
(3.8%)
Delinq 1+
(7.3%)
Delinq 1+
(5.7%)
Deep
Subprime
(7.0%)
BC Utiliz 10-49%
(5.7%)
BC Utiliz 50%+
(7.3%)
1.2% overall
bankcard bad rate
Never Delinq
(10.5%)
Never Delinq
(4.2%)
Never Delinq
(1.0%)
Nonprime segment
Have NEVER been
delinquent on any
trades
This node has
higher bad rate than average,
may still want to
originate balances
depending on revenue
Treatment:
Watch closely
27 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Targeting the ideal Millennial Step 2
to highlight the most predictive risk levers
in order to define the revenue breaks
to segment population for decisioning
Calculate revenue
Chi-square analysis
Revenue calculation
Merge revenue and risk
28 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Revenue calculation anchors
The EIRC for RevolvingSM (Estimated Interest Rate Calculator for Revolving) is a yield algorithm that uses longitudinal credit data to proxy the last 6 months of interest on credit cards
Key fields delivered:
Average effective APR (%)
Average interest (in $)
Average daily balance
Average revolving balance
The Experian TAPSSM (Total Annual Plastic Spend) is a spend algorithm that uses longitudinal credit data to proxy the last 12 months of spend on credit and charge cards
Key fields delivered:
Total Annual Plastic Spend
Wallet share
Payment rate
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Experian Public.
Revenue calculation
Estimated Interest Rate Calculation variable for average yield across all selected trades multiplied by 12 to annualize the output
Total Annual Plastic Spend on charge cards and bankcards multiplied by 0.0167 to get the estimated interchange
Total revenue per consumer per year
Annualized
Revolving
Interest Rate
Yield Interchange Revenue
Annualized
Spend
* 0.0167
Revenue
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Experian Public.
Rank-ordered revenue by generation
High Medium Low
$2,675 $637 $116
$1,627 $394 $67
Gen X is higher by: +39% +38% +42%
Revenue segments
Gen X
Gen Y
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Experian Public.
Millennial profiling
Key Statistics Gen Y Averages* Gen X Averages* Diff
Revenue $695 $1,143 39%
Total Annual Plastics Spend $12,978 $20,599 37%
Average bankcard balance $3,435 $6,672 49%
Average Debt to Income 14% 16% 13%
Average Income $41,000 $53,000 23%
VantageScore 635 657 3%
Bankcard utilization 42% 40% 5%
60DPD Bankcard Bad Rate 2.0% 1.8% 7%
*Consumers with at least one open bankcard
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Experian Public.
Targeting the ideal Millennial Step 3
to highlight the most predictive risk levers
in order to define the revenue breaks
to segment population for decisioning
Merge & segment
Chi-square analysis
Revenue calculation
Merge revenue and risk
33 © 2015 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
How to segment Millennials
Gen Y
Release Watch
Protect Attract
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Experian Public.
High bad rates
High overall risk
Low revenue
CLD or close
How to segment Millennials
Gen Y
Release Watch
Protect Attract
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Experian Public.
Mid-low risk
Mid-high revenue
CLD or closely monitor lines
How to segment Millennials
Gen Y
Release Watch
Protect Attract
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Experian Public.
Mid-low risk
Mid-high revenue
High on-us utilization
May consider CLI
How to segment Millennials
Gen Y
Release Watch
Protect Attract
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Experian Public.
Mid-low risk
Mid-high revenue
High off-us utilization
May consider CLI or improved rate
How to segment Millennials
Gen Y
Release Watch
Protect Attract
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Experian Public.
Millennial segmentation
Segment Average
VantageScore®
Average
revenue
Average
bankcard
utilization
Average
delinquency
(90+)
663 $362 44% 2.2%
521 $26 85% 12.1%
625 $823 52% 2.0%
711 $1,386 43% 0.0%
BAU*
Comparison of the segments illustrates the balance between
risk and revenue to improve profitability.
*BAU = Business As Usual baseline portfolio
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Experian Public.
Listening to Millennial needs
Inform me
Know who I transact with
Contact me at the right time
Provide me with the best offer
Know who I am
Know how to talk to me
Partner with me
Educate me
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Experian Public.
Summary Trends Reviewed millennial Generation to display key credit trends
Cohorts Point-in-time cohort comparison study to analyze behavior of generations
Entrepreneurs Reviewed key indicators on millennial small business owners
Segmentation Illustrated tools to effectively attract, maintain and retain the most profitable populations
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Experian Public.
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Experian Public.
Experian.com/Millennials
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Experian Public.
For more Gen Y insights:
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Experian Public.
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