It’s that time of year when shoppers are out in full force, braving Black Friday crowds and losing work productivity on Cyber Monday. Once the holidays have passed, big sales beckon to those looking for even more deals. Retailers are delighted to offer their store-branded credit cards, often sweetening the deal with special incentives, to fund all of these purchases.1 Consumers seem eager to score deep discounts and additional perks by accepting those offers of credit.2
As the dollars roll in this holiday season, it’s crucial that retailers don’t alienate the largest generation of adult U.S. consumers—millennials.
In 2015, ID Analytics conducted a study that revealed millennials are applying for traditional credit products at high rates, but are being turned down. The reason? They often have low credit scores or no scores, and therefore are viewed as high risk, because they lack sufficient credit history.
Our research shows that millennials are less risky than lenders realize. Perhaps the greater risk is overlooking them, especially when they come to you seeking credit. For example, we discovered that once millennials are turned down for credit most don’t apply for any type of credit products for at least one year. For those who reapply only one in 10 do so from the same provider.
During the rush of this holiday season, dismissing the creditworthiness of this up- and-coming generation of loyal customers could be costly. As seen in our research, you might only have one chance to capture millennials’ business and at the busiest shopping time of the year, this could be a missed opportunity to establish a relationship with a long-term customer.
New retail credit customers are often interested in special perks—points for every dollar spent, exclusive sales events, high value coupons and discounts for opening a new account. But it is these incentives that will keep them coming back even after the holiday madness.
There’s no greater opportunity to capture new business than now—when people are engaged in finding the perfect gifts and feeling the generosity of the season.
Alternative Credit Data solutions from ID Analytics can help you make smarter lending decisions and evaluate risk, by providing a comprehensive view of consumers with limited credit history. Alternative data assets in our ID Network include insights from the wireless, banking, peer-to-peer lending, checking and savings, and the sub-prime markets, plus address change histories. To learn more visit: http://www.idanalytics.com/solutions/credit-risk-solutions-and-risk-analytics/alternative-credit-data/
Patrick Reemts is the Vice President of Credit Risk Solutions for ID Analytics
1 Fontinelle, Amy. Store Credit Cards: Do The Incentives Pay Off?. Retrieved 12 December 2016 from http://www.investopedia.com/articles/pf/11/store-credit-cards-evaluation.asp
2 Tsosie, Claire. USA Today. Store credit card applications surge, but should you get one? (8 December 2016) http://www.usatoday.com/story/money/personalfinance/2016/12/08/store-credit-card-applications-surge-but-should-you-get-one/95028136/