College GraduRATES for New Credit Applications

July 12, 2016
By Patrick Reemts

With college graduation season coming to a close, nearly two million1 millennials are preparing to leave the days of studying, sleeping and partying behind to enter the work world. As graduates embark on this new chapter, they may find themselves in need of a new car, cellphone or credit card and we wondered if there might be a seasonal fluctuation in credit applications for this group.

When we examined credit and loan application data across industries for 22 – 25 year olds compared to 28-32 year old generations, we saw a boost in volume in the months following graduation season, with a notable drop-off in volume during August and September.

Credit App Distribution

Where are millennials applying? We focused on specific industries to identify trends in the data. We saw consistent application rates throughout the year for the telecommunications industry, but observed elevated rates for the lending and bankcard industries just after graduation season. The increased rates seem to suggest that young adults, including college graduates are looking for access to credit during the summer months of July and August.

What does this mean for your business? You may need to adjust your credit practices. Research from our study, ‘Millennials: High Risk or Untapped Opportunity?’ indicates that millennials applying for credit are being denied at a much higher rate than gen X and baby boomer applicants. Traditional credit scores have been shown to be less predictive of credit performance for younger generations, so financial institutions making credit decisions based solely on traditional credit bureau scores may consider millennials to be high-risk, even though they outperform other generations in repayment.2

Are millennials unfairly being denied credit based on traditional credit scoring models? Many of these lower-risk millennial graduates could represent a profitable opportunity for your business. Utilizing alternative credit data is one way to provide a comprehensive view of millennials’ credit worthiness to help tailor your credit policies to this emerging consumer group. Make sure you are welcoming recent graduates with credit policies designed to accommodate millennial consumers.

To learn more about millennials and credit, check out our infographic. For more information on using alternative credit data to make smarter lending decisions, download Harnessing Traditional and Alternative Credit Data.


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


1. National Center for Education Statistics

2. The Council of Economic Advisors.  15 Economic Facts About Millennials.