Are Millennials Unfairly Denied Credit Due to Traditional Credit Scores?

New Study from ID Analytics’ ID:A Labs underscores the importance of alternative credit data to understand credit worthiness for the millennial demographic

SAN DIEGO, Calif. –  ID Analytics®, LLC, a leader in consumer risk management, today announced a new study from ID:A Labs that analyzes consumer behavior from three generations, millennials, generation X and baby boomers, across multiple industries. The study, described in ID Analytics white paper, “Millennials: High Risk or Untapped Opportunity?” explores the rates at which millennials are seeking and being denied credit and highlights the benefits of alternative credit data, given that traditional scoring does not accurately capture this group’s credit worthiness and risk.

Millennial Credit and Behavior Trends

According to a recent report from the Consumer Financial Protection Bureau, “Data Point: Credit Invisibles,” young adults have a high incidence of being “credit invisible,” meaning their credit histories render them “unscorable” based on the traditional credit scoring methods. ID Analytics’ study reveals that while they do apply for credit, millennials are denied at a much higher rate – even though they outperform demographics within the same credit score range, baby boomers and Generation X are two to three times as likely as millennials to become delinquent in making a payment by 12 months or more.

Traditional credit scores, like FICO credit scores, are calculated based on mortgage, credit card, auto loan and other installment loan payment histories. Data released by the Federal Reserve Board of New York shows that nearly 40 percent of people below the age of 30 years have a FICO score below 621, putting many of them in the subprime category, while others do not have credit scores at all.

Traditional credit scores were valuable for previous generations, however, they may not provide the most accurate assessment of credit worthiness for the millennial demographic. This limited view hinders enterprises from understanding the true opportunity of millennial applicants and often results in credit declines or sub-par offers that are rejected by the consumer (i.e. higher interest rates, deposit requirements, limited features).


Delinquency Rates by Generation

Millennial deliquency rates_051215

Millennial consumers consistently outperform older generations with the same bureau scores, within the 600-700 score range

The Need for Alternative Credit Data

“Given the financial and credit behavior we’ve seen among the millennial population, lenders can no longer rely solely on traditional credit data and scores,” said Patrick Reemts, Vice President of Credit Risk Solutions at ID Analytics. “By leveraging alternative credit data – which utilizes proprietary alternative insights across multiple industries, plus address change histories – lenders are able to deliver a precise and unique view into a consumer’s credit risk and worthiness, which is particularly crucial for the millennial demographic.”

For more information on alternative credit data, please visit the following ID Analytics blog posts:

For more information on this ID Analytics study, please visit:


About ID:A Labs
ID:A Labs conducts research and analysis in the areas of identity fraud, credit risk, marketing and segmentation, authentication and identity proofing. ID:A Labs leverages the ID Network®, one of the nation’s largest network of cross-industry consumer behavioral data. Backed by patented technology, world-class analytics and the ID Network, ID:A Labs researches, analyzes and reports on developments in consumer behavior, identity and credit-related issues, the regulatory landscape and innovations in analytics around modeling and machine learning.


About ID Analytics, LLC

ID Analytics is a leader in consumer risk management with patented analytics, proven expertise and real-time insight into consumer behavior. By combining proprietary data from the ID Network — one of the nation’s largest networks of cross-industry consumer behavioral data—with advanced science, ID Analytics provides in-depth visibility into identity risk and creditworthiness. Every day, many of the largest U.S. companies and critical government agencies rely on ID Analytics to make risk-based decisions that enhance revenue, reduce fraud, drive cost savings and protect consumers. ID Analytics is a wholly-owned subsidiary of LifeLock, Inc. Please visit us at


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