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As millennials have now passed baby boomers as the largest segment of the U.S. population, this digitally independent generation is still much less savvy than older generations when it comes to their finances and credit management. Experian® recently released key findings today that provide a glimpse into the credit management habits of millennials and show how coming of age in a challenging economy has had an effect on this generation’s credit profile.

The analysis highlights the credit characteristics of an average millennial as well as a look at how other generations are faring. The groups studied included Generation Y/millennials (ages 19–34), Generation X (ages 35–49), and baby boomers and the greatest generation combined (ages 50–87).

Snapshot of credit characteristics by generation (including national averages)


“Given the significance millennials play in financial services and the credit marketplace, it is crucial to understand this influential consumer segment and how they use credit as a tool,” says Michele Raneri, vice president of analytics and business development. “While this generation may not look like they are on the right track financially, it’s important to keep in mind that credit scores are built on credit experiences, and while this generation has been slower to use credit, they have plenty of opportunities to build a positive credit history. The best way to do that is to understand credit before using it.”

Comparing millennials with Generation X

Even with millennials taking a little longer to establish some forms of credit compared with previous generations, their sheer numbers make them an important and growing market segment. When comparing credit usage of a more youthful Generation X population, there appear to be some interesting trends in origination patterns. Auto loans make up 14 percent of all recently opened accounts for millennials, compared to 1 percent for their Generation X counterparts at the same age in 1998. Similarly, student loans make up 24 percent of all new accounts for millennials, compared to 20 percent for their Generation X counterparts at a comparable age. The study also shows that fewer millennials are using bankcards, with only 27 percent of their recently opened accounts being bankcards, compared to 46 percent for their Generation X counterparts at the same age.

“We’re seeing that millennials are purchasing cars at a much earlier point in life, which is giving them the opportunity to build credit a little differently than previous generations,” says Rod Griffin, Experian’s director of public education. “This is a critical time for members of this generation as they are learning to use credit as a tool. With so many financial education resources available to help them, we believe that members of this generation are more empowered and informed than members of other generations and are starting their adult lives off by building strong credit as they set out on their own.”

The study also showed that millennials appear to favor auto loans over leases, as there were 13.4 auto loans per one lease. This ratio is 9.3 to 1 for Generation X and 8.3 to 1 for baby boomers. However, auto leases tend to be a product that may attract older consumers because they tend to have higher and more established credit. Consequently, findings from the analysis showed that the older millennials were more likely to have an auto lease than their younger counterparts.

Source: Experian