Are Your Credit Policies Hindering Grads from Getting a Bank Card?

June 11, 2015
By Patrick Reemts

A recent Bankrate study showed that 63% of millennials, 18-29 do not currently own a credit card,1 even though many card issuers offer special cards designed just for students.2 With the growth in acceptance of marketplace lending, there’s been speculation that millennials might choose to pursue alternate avenues of financing rather than seek traditional sources of credit.3However, based on a recent study of millennial purchasing behavior conducted by ID:A Labs, we have seen a steady rise in bankcard applications since 2011, indicating that millennial consumers are in fact actively seeking credit but are being denied at a higher rate than other groups.

Recent regulatory measures are often cited as an obstruction to millennial’s ability to obtain credit. The Credit CARD Act of 2009 prohibits banks from providing those under 21 years of age with a credit card without a guardian co-signer, unless the applicant can provide proof of sufficient income to cover the credit obligation.4 Many believe that this law has made it more difficult for millennials to fully participate in traditional US credit markets,5 because credit bureau scores weigh heavily in the credit decisioning process.

Are your credit policies hindering millennials from obtaining their first bank cards especially as they head off to college or to enter the workforce? They are in the market, looking for credit, and banks have an opportunity to capitalize on this largely untapped demographic. Read more about millennial credit activity in our Millennials: High Risk or Untapped Opportunity white paper.


Patrick Reemts is Vice President of Credit Risk Solutions at ID Analytics, LLC.