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Serving the Newest Generation of Credit-Active Consumers: Gen Z

Matt Komos
Blog Post03/24/2020
Business Credit Trends and Reporting Research
Banner image for How Lenders Can Serve the Newest Generation of Credit-Active Consumers: Gen Z

Lenders have a new and growing group of consumers to reach: Generation Z. This generation of consumers, born in 1995 or later, represents 32% of the total U.S. population. For lenders looking to grow their business, Gen Z offers an opportunity to capture the loyalty of consumers while they are still young.

For many years, lenders have focused on understanding the financial habits and preferences of the Millennial generation (consumers born between 1980 and 1994). These consumers are approaching their 40s and many are in their prime earning years. With 8% of the Gen Z population already over 18, lenders should shift their efforts to meet the needs of this growing population now.

To help lenders understand Gen Z, we conducted a study using depersonalized, aggregated credit data about the account opening and balance activity of consumers between the ages of 18 and 24 in 2019. We selected Gen Z consumers over 18 because this is typically the age when many consumers enter the labor force and generate income, making them eligible to borrow from most lenders.

Understanding Gen Z’s approach to credit

Despite their young ages, Gen Z consumers already participate materially in the credit market, as 66% are already credit active. They also appear to handle their credit responsibly. In fact, half of credit-active U.S. Gen Z consumers are in the prime and above risk tiers, making them strong prospective customers for many lenders.

It’s important for lenders to understand that Gen Z consumers are very different from the generations before them. Whereas many Millennials graduated from college or started their careers in the midst of the historic recession in the late 2000s, many Gen Z consumers were in their formative childhood years and witnessed their parents and relatives struggle financially. These experiences shaped their perspectives, behaviors and approach to debt.

Gen Z consumers are also entering the credit market during the longest economic expansion in U.S. history. In parallel to this economic expansion, access to credit has continued to grow as well. Gen Z consumers are taking advantage of this access, as more than 17.6 million of these consumers over 18 are already credit active.

The impact of student loans

Many lenders worry about the impact of student loans on Gen Z consumers’ ability and appetite to take out other credit products. Despite the prevalence of student loans across all age groups in the U.S., less than half (39%) of credit-active Gen Z borrowers hold a student loan, with a median balance per consumer of $12,030. While 6.85 million U.S. Gen Z consumers have student loans, it does not appear to inhibit their ability to get other credit products. In fact, 44% of U.S. Gen Z consumers with a student loan also have a credit card and 20% have an auto loan.

Credit cards remain strong with Gen Z

In the U.S., half of credit-active Gen Z consumers have a credit card, the most popular product among this age group. Many younger consumers receive smaller credit limits on cards — part of lenders’ strategy to manage risk with new-to-credit consumers — which can drive higher utilization (balance to credit line) rates. In the United States, credit-active Gen Z consumers have an average of about 1.5 cards, with an average utilization rate of 31%. Consumers are still generally using the credit cards they receive prudently, with low median balances per consumer of $606.

Despite the rise of FinTech lenders and their primary product offering of personal loans, unsecured personal loans have not overtaken credit cards in popularity. Only 4% of credit-active Gen Z consumers in the U.S. have a personal loan. The study clearly shows that mobile-first, digital-native Gen Z consumers still want and receive credit cards in large numbers.

Gen Z consumers are entering the credit markets quickly, and their collective purchasing power continues to grow. Before Gen Z reaches the credit activity levels of other generations, lenders have an opportunity to prepare now to meet their needs and better market to them.

To learn more about the Gen Z study, visit

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