Credit outlook for Millennials and Gen Z

© 2018 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks 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.
Credit outlook
for Millennials
and Generation Z

Introducing:
© 2018 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks 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.
Michele Raneri
Experian
Crissy Wallace
Experian

3 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public.
#experian
Defining Millennials and Gen Z

Age 51-71
Age 72 or
older
Age 36-50Age 18-21
Younger:
Age 22-28
Older:
Age 29-35
Generations are based on date of birth,
we will be focused on the youngest groupings
Gen YGen Z Gen X Boomer Silent
Focus area

The US census showing the population by age
and gender
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
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
100+
Male % of Population Female % of Population
* Gen Z marketable 18-21 = 5% U.S. Population
Source: Census (2016)
Gen Z*
YY OY
Gen X Baby Boomers SilentMillennials

While they are both younger, there are still many
differences in the generations
Gen Z aka
Centennial
28% of US, with 5% over 18 –
Mainly children of Gen X
 Digital-centric
 Raised on social web
 Communicate with images
 Create things
 Frugal shoppers
Gen Y aka
Millennial
Over 19% of US – Mainly children
of older Gen X and Boomers
• Digital-savvy
• Raised on the web
• Communicate with text
• Share things
• Luxury shoppers
Study from www.Randstad.ca
Age 18-21
Younger:
Age 22-28
Older:
Age 29-35
Gen YGen Z

Today we will be sharing a lot of facts about the
younger generation
Personal
loans
Mortgage
Alternative
data
Bankcard

#experian
Credit trends
of younger consumers

VantageScore® 3.0
Model overview
• 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
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

As consumers age, they typically become
more prime
0%
20%
40%
60%
80%
100%
Gen Z Gen YY Gen OY Gen X Boomer Silent
Percentofconsumers
VantageScore® breaks within each generation
Deep Subprime
Subprime
Near Prime
Prime
Super Prime

Looking at the averages helps to demonstrate this
636
652
665
679
727
764
550
600
650
700
750
800
Average VantageScore® by generation
US average
= 677

Personal loan trends

Age 51-71Age 36-50
Gen X Boomer
Personal loan originations are dominated by Boomers
and Gen X, but Millennials are joining in
1%
21%
34%
39%
5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Gen Z Gen Y Gen X Boomer Silent
Percentofnewdollarsoriginated
Dollars of newly originated personal loans
4Q14 4Q15
4Q16 4Q17
Gen X and
Boomer lead
new balances

Consumer personal loan balances are increasing,
including younger generations
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
4Q11 4Q14 4Q17
Millions
Personal loan balances
Gen Z +57%
Gen Y +40%
Gen X +35%
Boomer +48%
Silent +36%
Since
2014
Change 2011-2017

Personal loan delinquencies are trending down overall,
but younger people still over US average
0%
1%
2%
3%
4%
5%
6%
Percent of balances 90-180 DPD
Gen Z Gen YY Gen OY Gen X Boomer Silent US Avg
As of 4Q17
US 1.32%
Gen Z 2.47%
Gen YY 2.08%
Gen OY 1.51%
Gen X 1.43%
Boomer 1.08%
Silent 1.22%

Drilling down, fintech as a subset of personal loans,
younger people are engaged as well
Fintech loans
29%
41%
26%
3% 1%
Traditional loans
37%
32%
22%
8%
1% Gen Z
Gen Y
Gen X
Boomer
Silent
Data based on number of loans August 2017,
not balances as previously shown
Gen X for
Fintech
with 41%
Boomers for
Traditional
with 37%

Younger generations personal loan behaviors differ
GEN Y
• Similar
VantageScore®
• Similar loan
amounts
• Higher bad
rates on
traditional
• More Fintech
loans
GEN Z
• Similar
VantageScore®
• Higher
traditional loan
amounts
• Much higher
bad rates on
traditional
• More Fintech
loans
FinTech vs.
traditional by
generation
Vantage
Score®
(new PL)
Average
loan
amount
90+
(new PL)
Gen
Y
Traditional 642 $6k 5.2%
Fintech 639 $6k 4.5%
Gen
Z
Traditional 631 $3k 8.5%
Fintech 636 $1k 5.8%

#experian
Bankcard trends

Bankcard originations are becoming evident
for the younger people, older still largest percent
1%
20%
29%
41%
9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Dollars of newly originated bankcards
4Q14 4Q15 4Q16 4Q17
Baby boomers
still leading
Age 51-71
Boomer

Consumer bankcard balances are steadily increasing
across all generations
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
4Q11 4Q14 4Q17
Millions
Bankcard balances
Gen Z +55%
Gen Y +28%
Gen X +10%
Boomer +22%
Silent +57%
Since
2014
Change 2011-2017

Bankcard delinquencies for younger people
are higher than the US average
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
Gen Z Gen YY Gen OY Gen X Boomer Silent US Avg
US 1.54%
Gen Z 2.96%
Gen YY 2.33%
Gen OY 2.18%
Gen X 1.66%
Boomer 1.14%
Silent 1.75%
As of 4Q17

Mortgage trends

Younger people are beginning to originate mortgages
0.2%
23%
38%
34%
5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Dollars of newly originated mortgages
4Q14 4Q15
4Q16 4Q17
Gen X originating the
most, but younger
people are coming into
the market
23% of new dollars
originated in mortgage
were tied to Millennials
Age 36-50
Gen X

Consumer mortgage balances are increasing
across all generations
$-
$2
$4
$6
$8
$10
$12
4Q11 4Q14 4Q17
Billions
Mortgage balances
Gen Z +48%
Gen Y +2%
Gen X - 4%
Boomer +11%
Silent +56%
Since
2014
Change 2011-2017

As of 4Q17
US 0.94%
Gen Z* 0.00%
Gen YY 0.47%
Gen OY 0.62%
Gen X 1.03%
Boomer 0.93%
Silent 1.18%
Mortgage delinquencies are low for young people,
mortgages are not yet widespread
0%
1%
2%
3%
4%
5%
6%
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
Gen YY Gen OY Gen X Boomer Silent US Avg*Removed Gen Z due to sample size

Millennials are entering the mortgage market
Gen OY
no mortgage
50%
Only 15%
of Millennials have a mortgage on
the credit file, vs. 25% overall
Gen OY
w/ mortgage
13% Gen YY
no mortgage
35%
Gen YY
w/ mortgage
2%

Millennials with mortgages are heaviest in South and
West regions
4%
11%
13%
15%
19%
23%
1%
2%
2%
4%
3%
4%
0% 5% 10% 15% 20% 25% 30%
New England
Southwest
Mid Atlantic
Midwest
West
South
No Mortgage Mortgage on File
Millennials by region

77% of millennials with mortgage are prime
or better
21%
56%
13%
7%
1% 0%
0%
10%
20%
30%
40%
50%
60%
Super Prime Prime Near prime Subprime Deep
Subprime
Unscoreable
Current VantageScore® for Millennials
5%
34%
15%
33%
10%
3%
0%
10%
20%
30%
40%
50%
60%
Super Prime Prime Near prime Subprime Deep
Subprime
Unscoreable
Millennials with mortgage Millennials without mortgage
77% 39%

There is a significant difference between Millennials
with a mortgage and those without
Average
metrics
Age VantageScore
®
Total
number
of trades
Total
debt
Income DTI
No mortgage 28 623 8 $19k $33k 11%
Have mortgage 31 716 16 $225k $64k 37%
X

#experian
Young people and
alternative finance

Traditional credit data
Data assembled and managed in the
core credit files of the nationwide
consumer reporting agencies, which
includes:
• tradeline information (including
certain loan or credit limit
information, debt repayment history,
and account status)
• credit inquiries
• information from public records
relating to bankruptcies.
It also refers to data customarily
provided by consumers as part of
applications for credit, such as income
or length of time in residence and
employment.
Alternative credit data
Data that are not “traditional.” We use
“alternative” in a descriptive rather than
normative sense and recognize there
may not be an easily definable line
between traditional and alternative data.
Examples include:
• Alternative financial service data
(short-term / payday loan, rent to
own)
• Rental payments
• Asset ownership
• Full file public records
• Consumer permissioned data
Defining alternative credit data Alternative Credit Data?
All information that is FCRA compliant
Focus area

Younger people make up one third all alternative
finance consumers
Gen YY
14%
Gen OY
19%
Gen X
36%
Boomer
26%
Gen Z — 1%
Average age
US: 52
Clarity: 42
Missing
1%Silent
3%
34%
Alternative finance consumers
Missing 1%
Gen Z 1%
Gen YY 14%
Gen OY 19%
Gen X 36%
Boomer 26%
Silent 3%

Young people across the full credit spectrum use
alternative finance
2% 3% 6%
11%13% 13% 13% 14%
19%
24%22%
14% 15%
17%
20%
22%
44%
50%
52%
50%
44%
37%
20% 23% 19% 17%
11% 6%
Super Prime Prime Near Prime Subprime Deep Subprime
1% 14% 19% 36% 26% 3%% file

Opportunities with Millennials and Gen Z in the credit
market
Personal loan:
Younger people prefer
online/Fintech
Bankcard:
Growing balances, watch
bad rate
Mortgage:
85% of Millennials do not yet
have a mortgage
Alternative finance:
Over 1/3 of young people use
alt finance

#experian
Michele Raneri
Experian
Crissy Wallace
Experian
Q&A

©2017 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. Confidential. Internal. Restricted. – please choose the appropriate category]

Credit outlook for Millennials and Gen Z

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