Millennials, Generation Z and credit
Introducing: Kelley Motley Experian Natasha Madan Experian
Generation overview Gen Z Gen Y Gen X Boomer Silent Age 18 20 Younger: Age 21 27 Age 35 49 Age 50 70 Age 70+ Older: Age 28 34 3 Experian 4/26/2017 Experian Public Vision 2017
Generational review 4 Experian 4/26/2017 Experian Public Vision 2017
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100 US population The growth of Gen Z and Millennials Gen Z ~86M (27%) Gen YY Gen OY ~31MM(10%) ~30MM(9%) Gen X ~61M (19%) Baby Boomers ~80M (25%) Silent ~28M (9%) 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 5 Experian 4/26/2017 Experian Public Vision 2017 Age
VantageScore 3.0 Model overview Predicts risk of borrower Likelihood of future serious delinquencies (90 days later or greater) Any type of account 24-month performance Score range of 300 850 Higher scores represent a lower likelihood of risk Lower scores are higher risk A = Super-prime 781 850 B = Prime 661 780 C =Near prime 601 660 D = Sub-prime 500 600 F = Deep sub-prime 300 499 6 Experian 4/26/2017 Experian Public Vision 2017
Average VantageScore by generation 653 631 611 616 626 619 626 638 641 646 655 687 692 700 732 730 730 664 666 673 Gen Z Young Millennial Older Millennial Gen X Boomer Silent Average 2012 2014 2016 7 Experian 4/26/2017 Experian Public Vision 2017
VantageScore Risk tiers Gen Z subprime / near prime will migrate to prime / super prime as they age 70% 60% 50% 40% 30% 20% 10% 0% Gen Z Gen YY Gen OY Gen X Boomer Silent Deep Subprime Subprime Near prime Prime Superprime 8 Experian 4/26/2017 Experian Public Vision 2017
Debt by risk tier $299,186 Extreme growth as younger consumer begin to build credit $225,691 $121,460 $129,030 $65,473 $12,679 Gen Z Gen YY Gen OY Gen X Boomer Silent Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 9 Experian 4/26/2017 Experian Public Vision 2017
Percentage of debt by risk tier Generation Z Generation YY Generation OY 10% 11% 11% 11% 11% 12% 11% 11% 10% 9% 32% 27% 48% 37% 35% 32% 30% 30% 35% 34% 33% 32% 30% 19% 25% 30% 21% 21% 20% 18% 17% 15% 15% 15% 15% 15% 19% 21% 12% 19% 20% 17% N/A N/A 1% 3% 5% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 31% 33% 36% 38% 40% 1% 1% 1% 2% 2% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 34% 35% 35% 35% 36% 5% 5% 7% 8% 9% Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Deep Subprime Subprime Near Prime Prime Super Prime 10 Experian 4/26/2017 Experian Public Vision 2017
Gen Z Gen YY Gen OY Gen X Boomer Silent Debt ($s) Billions Types of debt by generation Silent $7,000 $6,000 Mortgage Boomer Gen X $5,000 $4,000 Gen OY Gen YY $3,000 $2,000 Gen Z $32B from STU, BCC, AUA $1,000 $0 $200 $400 $600 Debt ($s) Billions $0 STU RTA PIL HLC BCC AUA 11 Experian 4/26/2017 Experian Public Vision 2017
Thin files by generation 94.7% 63.9% 36.1% 28.1% 22.7% 38.4% 63.9% 71.9% 77.3% 61.6% 5.3% 36.1% Gen Z Gen YY Gen OY Gen X Boomer Silent Thick: 5 or more trades Thin: 1-4 trades 99.3% 97.6% 94.7% 0.7% 2.4% 5.3% 56% 54% 44% 46% 52% 48% 51% 49% 46% 54% Gen Z and Millennials files are getting thicker over time 2014 2015 2016 2012 2013 2014 2015 2016 12 Experian 4/26/2017 Experian Public Vision 2017
Percent of consumers Percent of consumers Average Income Insight SM and Debt-to-income 50% Income Insight SM 85% 40% 30% 20% 82% 84% Average Income Insight SM Gen Z: $33.8K Gen X: $84.9K Gen YY: $41.6K Boomers: $102K Gen OY: $60.5K Silent: $95.3K 10% 0% 0-<25K 25K-< 35K 35K-< 45K 45K-<55K 55K-< 65K 65K-<75K 75K-<85K 85K-<99K 100K-<125K 125K-<150K 150K-<175K 175K-<200K 200K-<250K 250K+ 100% Debt-to-Income Insight SM Gen Z Gen YY Gen OY 80% 60% 40% Average Debt-to-Income SM Gen Z: 5.7% Gen X: 15.9% Gen YY: 10.2% Boomers: 12.6% Gen OY: 14.1% Silent: 5.7% 20% 0% 0%~10% 11%~20% 21%~30% 31%~40% 41%~50% 51%~60% 61%~70% 71%~80% 81%~90% 91%~100% >100% 13 Experian 4/26/2017 Experian Public Vision 2017
Total Annual Plastics Spend (Experian TAPS SM ) Type of spend 66% Gen Z Gen YY Gen OY Gen X 41% 40% 40% 47% 37% Average Experian TAPS SM Gen Z: $9583.16 Gen YY: $9083.59 Gen OY: $13,143.63 Gen X: $19,759.33 29% 30% 11% 9% 4% 2% 1% 2% 6% 8% 3% 6% 9% 11% Revolver Transactor Rate Surfer Consolidator Mixed 14 Experian 4/26/2017 Experian Public Vision 2017
Bankcard balances and utilization $8,000 44.0% $7,000 $6,979 43.5% 43.5% $6,000 Gen Z 43.0% $5,000 $4,451 Gen YY Gen OY 42.5% 42.6% 42.5% $4,000 Gen X $3,000 $2,000 $1,574 $2,477 42.0% 41.5% 41.6% $1,000 41.0% $0 Balances 40.5% Utilization 15 Experian 4/26/2017 Experian Public Vision 2017
Does interest rates matter to Gen Z / Millennials? 15% Mortgage interest rate 15% Revolving interest rate 15% Student loan interest rate 12% 12% 12% 9% 9% 9% 6% 6% 6% 3% 3% 3% 0% Gen Z Gen YY Gen OY Gen X 0% Gen Z Gen YY Gen OY Gen X 0% Gen Z Gen YY Gen OY Gen X 16 Experian 4/26/2017 Experian Public Vision 2017
Home lending trends 17 Experian 4/26/2017 Experian Public Vision 2017
Percentage of mortgage holders 60% 50% 56.9% 40% 45.3% 39.2% 30% 34.4% 34.7% 20% 19.3% 23.3% 17.2% 10% 0% 0.3% 0.4% 4.3% 4.8% Gen Z Gen YY Gen OY Gen X Boomer Silent Open Mortgage Open+Closed Mortgage 18 Experian 4/26/2017 Experian Public Vision 2017
Average mortgage payment nationwide $2,500 Average payments $2,000 $1,500 $1,000 $908 $1,060 $1,438 $500 $- All CA FL NY TX $400,000 Average balances Gen Z Gen YY Gen OY $300,000 $200,000 $100,000 $- $196,651 $147,368 $104,468 All CA FL NY TX 19 Experian 4/26/2017 Experian Public Vision 2017
Average VantageScore 3.0 for mortgage holders 70% 60% Avg. 675.3 689.3 707.5 705.4 724.4 680.7 50% 40% 30% 20% 10% 0% Gen Z Gen YY Gen OY Gen X Boomer Silent Deep Subprime Subprime Near Prime Prime Superprime 20 Experian 4/26/2017 Experian Public Vision 2017
Auto trends 21 Experian 4/26/2017 Experian Public Vision 2017
Who contributes the largest to this growth? Percentage of auto loan and lease growth by age 2.5% 2.0% Gen Z Gen YY Gen OY Gen X 1.5% 1.0% 0.5% 0.0% 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Current age 22 Experian 4/26/2017 Experian Public Vision 2017
Auto loans vs. leases 40% 35% Gen Z Gen YY Gen OY Gen X 30% 25% 20% 15% 10% 5% 0% % With Auto Lease Trade % With Auto Loan Trade % With Both Auto Loan and Lease 23 Experian 4/26/2017 Experian Public Vision 2017
Average VantageScore 3.0 for auto holders 60% 50% Avg 628.7 642.4 661.2 672.2 710.8 735.9 40% 30% 20% 10% 0% Gen Z Gen YY Gen OY Gen X Boomer Silent Deep Subprime Subprime Near prime Prime Superprime 24 Experian 4/26/2017 Experian Public Vision 2017
Loan amounts for auto holders by generation 30% 25% 20% 15% 10% 5% 0% Gen Z Gen YY Gen OY Gen X Boomer Silent <5000 5001-10000 10001-15000 15001-20000 20001-25000 25001-30000 30001-35000 35001-40000 40001-45000 45001-50000 >50000 25 Experian 4/26/2017 Experian Public Vision 2017
Loan amounts by VantageScore 3.0 bands 30% Gen Z 30% Gen YY 30% Gen OY 25% 25% 25% 20% 20% 20% 15% 15% 15% 10% 10% 10% 5% 5% 5% 0% 0% 0% Deep Subprime Subprime Near Prime Prime Super Prime 26 Experian 4/26/2017 Experian Public Vision 2017
Student lending trends 27 Experian 4/26/2017 Experian Public Vision 2017
Trillions Trillions Student loan growth relative to other credit types 1.8 1.5 1.3 1.0 0.8 0.5 0.3 0.0 Non-real estate outstanding debt Change since 4Q-09 Retail Bank Card Auto Student +74% 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 Home equity outstanding debt Change since 4Q-09 HE Loan HELOC Mortgage -31% 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 $9.0 $8.0 $7.0 Mortgage ($ trillions) 28 Experian 4/26/2017 Experian Public Vision 2017
Average student loans and balances 5.0 4.5 Average student loans 4.5 4.2 20,000 18,000 Average balances 18,308 17,552 4.0 3.5 3.6 16,000 14,000 13,074 15,096 3.0 2.5 2.0 2.5 2.8 2.0 12,000 10,000 8,000 8,842 1.5 1.0 6,000 4,000 4,381 0.5 2,000 0.0 Gen Z Gen YY Gen OY Gen X Boomer Silent 0 Gen Z Gen YY Gen OY Gen X Boomer Silent 29 Experian 4/26/2017 Experian Public Vision 2017
Student loan delinquency rates percent balances 10% 8% 6% 4% 2% 0% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 2009 2010 2011 2012 2013 2014 2015 2016 60 DPD 90 DPD 1.2% 0.9% 1.0% 1.1% 0.6% 0.6% 0.2% 0.2% 0.3% 0.20% 0.04% 0.1% Gen Z Gen YY Gen OY Gen X Boomer Silent 30 Experian 4/26/2017 Experian Public Vision 2017
How can we reach Gen Z? 31 Experian 4/26/2017 Experian Public Vision 2017
My how the times have changed! Where did you get your first credit? How did you get the credit exactly? 32 Experian 4/26/2017 Experian Public Vision 2017
What Gen Z / Millennials want Make it relevant Appropriate credit offers Think long-term Honest feedback Consistency Trust 33 Experian 4/26/2017 Experian Public Vision 2017
How to bring them into YOUR strategy Message with authenticity Maintain a long-term vision Connect them to something bigger Provide education for financial literacy Keep up with technological expectations 34 Experian 4/26/2017 Experian Public Vision 2017
Questions and answers Experian contact: Kelley Motley Kelley.Motley@experian.com Natasha Madan Natasha.Madan@experian.com 35 Experian 4/26/2017 Experian Public Vision 2017
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