Get Millennials Credit Ready for the New School Year
As millennials head back to college, they will be buying items to get ready for the new school year. These purchases could include big-ticket items like a computer, smartphone, furniture or a car. To afford these purchases, millennials may need access to credit. Did you know that 33% of millennials are underbanked and 63% don’t have a credit card?1 Our study, ‘Millennials: High Risk or Untapped Opportunity’ dispels the common myth that millennials don’t have credit cards because they aren’t interested in obtaining credit. In fact, our research indicates that millennials are seeking credit and are being denied at a much higher rate in comparison to gen X and baby boomers.
So what can your institution do to help millennials prepare for the school year with better access to credit? How accurate are your credit scoring models in assessing millennial credit behaviors? Traditional credit scores have been shown to be less predictive for younger generations, so enterprises basing credit decisions on traditional credit bureau scores alone will likely view millennials as high-risk applicants, even though they outperform other generations in repayment.2 There are many millennials that are low risk and provide a profitable opportunity for your enterprise. It may be time to utilize alternative credit data for a comprehensive view of millennials’ credit worthiness.
Check out our infographic, “Millennials: High Risk or Untapped Opportunity,” for insight on how traditional credit scoring models impact the millennial credit picture.
Patrick Reemts is Vice President of Credit Risk Solutions at ID Analytics, LLC