Generation Z - those born between 1996 and 2010 - has stronger credit profile than Millennials and even Generation X back when they were at the same age. The Gen Zs, of whom the oldest is just about 24 years old, are already credit active and are paying some sort of loan product, including multiple credit cards.
A new study from credit Bureau TransUnion found that 66% of the adult Gen Zs have active loans than millennials had when they were at the same age.
Credit, debts, and loans are commonly viewed negatively. However, as highlighted in the study, for someone to enter into a loan arrangement, a person should have a high credit score.
This means that they have a good history of paying their debts and that they have strong proof that they are capable of paying their debts. Indeed, half of the Gen Zs surveyed for the study belonged to a credit score in the prime range or a VantageScore of 661 and above. To compare, only 39% of the Millennials achieved that ranking at the same age.
According to the study, there is also a strong indication that Gen Z is having an easier time finishing off loans compared to Millennials. This better credit ranking could indicate that Gen Zs will be in better financial standing as they continue to age and reach their prime.
Indeed the common loans that Gen Zs have reflected a an easier lifestyle for the generation in the long run. For instance, about 23% of Gen Zs have auto loans compared to 16% of the millennials. Forty-one percent of Gen Zs are approved for credit cards compared to 34% of Millennials. Millennials, at the same time, are more likely to enter into student loans than the Gen Zs.
The study acknowledged that Gen Z has more access to a range of loan products at present than Millennials, hence, more opportunities to prove their ability to pay. Also, Millennials primed at the time of recession when financial institutions were tougher when approving loans.
Meanwhile, a separate study noted that Gen Zs has now become the largest generation, making up 32% of the global population. Of the 7.7 billion people worldwide, 2.47 billion are Gen Zs. Their number is now bigger than Millennials and Baby Boomers.
Compared to generations before them, more Gen Zs are in school today. Many refused any political affiliations. This generation is also better at saving money. Furthermore, they are more aware of diversity and have an open mind on religious difference and gender issues.
