Three Key Stats That Show the Long-Term Value of Millennial and Gen Z Borrowers 

Millennials, born between 1980 and 1994, and Gen Zers, born between 1995 and 2010, are more than twice as likely to be thin-file consumers (individuals with two or fewer trade lines) than their older counterparts. Because thin-file consumers lack robust credit histories, they are in a vicious cycle of having difficulty obtaining loans and subsequently being unable to grow their credit. 

At Open Lending, we’re dedicated to stemming this cycle by empowering more automotive lenders to serve more deserving borrowers outside the traditional prime category. To better understand the younger generation of borrowers, we examined Millennial and Gen Z consumers and their borrowing trends to uncover how financial institutions can best serve them. 

Through analyzing two years of data provided by TransUnion, we found that despite their thin credit profiles, Millennial and Gen Z thin-file consumers quickly advance credit tiers and transition to established consumers faster than older thin-file consumers. 

As their credit grows, Millennials and Gen Zers prioritize automotive loans with lower delinquency rates than Gen X and older consumers. Below are three key insights from the report. You can download the full report here. 

30% of Millennial and Gen Z thin-file consumers moved up credit tiers within two years, compared to 22% of Gen X or older thin-file consumers. 

Examining a group’s ability to improve their VantageScore® 4.0 over time can provide insight into their financial future. The research suggests that Millennial and Gen Z thin-file consumers are more likely than Gen X or older thin-file consumers to move up credit tiers within two years. This upward trajectory points to the long-term promise of Millennial and Gen Z consumers. Once they can build credit, they do so responsibly and with speed. Financial institutions should see a chance to enable Millennials and Gen Zers to grow credit and help build a secure financial future. 

Two of every five Millennial and Gen Z thin-file consumers returned to the institution for their next product.  

Long-term loyalty is a win-win for borrowers and lenders. Borrowers know they can trust their financial institution repeatedly, and lenders gain years of value that benefits their institution’s bottom line. According to the report, 40% of Millennial and Gen Z consumers returned to the same type of financial institution for their next credit product. By recognizing Millennial and Gen Z loyalty now, financial institutions can gain this group’s business from the start and grow with their borrowers. 

Millennial and Gen Z thin-file consumers are 33% less likely to be more than 60 days past due on automotive loans than Gen X and older thin-file consumers.  

As delinquency rates rise, many financial institutions have tightened lending criteria or halted lending services altogether. However, the research suggests that Millennial and Gen Z consumers are still prioritizing their automotive loans and are 33% less likely to be more than 60 days past due than older consumers. Their commitment to paying off automotive loans signals the importance of vehicle ownership to Millennial and Gen Z consumers and their potential long-term value for financial institutions. 

Today’s Millennial and Gen Z consumers represent the future of automotive borrowing. Adopting Lending Enablement Solutions like Open Lending’s Lenders Protection™ now can help you capture borrower loyalty in its early stages and reap the long-term benefits of a loyal cohort committed to automotive loans. For more on Millennial and Gen Z consumers, like their most common trade lines and average VantageScore® 4.0 once established, download the full report here.