Millennials – Credit Invisibles?

May 12, 2015
By Patrick Reemts

Millennials.  The largest consumer group since the baby boomers.  As they reach adulthood, what will their purchasing behavior look like in this new, ever-evolving economy?  What adjustments should be made to business practices, if any, to attract these customers and take advantage of their significant buying power, predicted to reach $200 billion by 2017?2

A recent bankrate study showed that 63% of millennials, 18-29, do not currently own a credit card.3 Millennials are also delaying other traditional signs of financial adulthood, such as buying a home or getting married.4 Millennials are technology savvy and the most connected generation in history. The Pew Research Center calls them “history’s first ‘always connected’ generation, treating their multitasking, handheld devices’ almost like a body part”.5  They are early adopters of technology, and with the emergence and rapid adoption of marketplace lending, there has been speculation that millennials might abandon traditional credit sources in favor of alternate avenues of financing.6 A recent study by the CFPB, Data Point: Credit Invisibles, shows that age is a significant factor in determining a consumer’s access to credit markets, with adults aged 19-25 having a high incidence of being ‘credit invisible’, meaning that their credit histories have potentially rendered them ‘unscorable’ in the eyes of the three nationwide credit reporting agencies.7

Are your credit policies designed to accommodate millennials, or are they creating a barrier to access for this consumer group? ID Analytics explores these issues in a new white paper Millennials: High Risk or Untapped Opportunity based on a comprehensive study of millennial credit activity.

 

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

 

 

1. http://www.nytimes.com/2015/01/20/science/millennials-set-to-outnumber-baby-boomers.html?_r=0

2. http://www.forbes.com/sites/danschawbel/2015/01/20/10-new-findings-about-the-millennial-consumer/

3. http://www.bankrate.com/finance/credit-cards/more-millennials-say-no-to-credit-cards-1.aspx

4. http://www.whitehouse.gov/sites/default/files/docs/millennials_report.pdf

5. http://bedtimesmagazine.com/2012/01/meet-the-millennials-getting-to-know-your-next-big-customer/

6. http://money.cnn.com/2014/12/18/smallbusiness/alternative-lending-millennials/

7. http://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf