‘Gen Z’ Off to Strong Start With Credit, Analysis Shows

By Adam He on 7/6/2017

The oldest members of “Generation Z” have barely crossed the threshold into legal adulthood, but they’re already demonstrating financial prowess, according to an analysis released this week by the Experian credit reporting bureau. In fact, Experian reports that 18- to 20-year-olds are more likely to pay off their balances each month than younger millennials, those ages 21 to 27.

Of course, members of Gen Z have also had less time to make money mistakes and incur obligations. “They don’t have as much debt yet,” says Kelley Motley, director of analytics at Experian. Many still live with their parents and don’t yet have a mortgage or children to support. That might help explain why they’re good at staying on top of monthly payments.

Many members of Gen Z also have impressive credit scores: 37% already have at least a “prime” score, which Experian defines as 661 or better. On average, they have a slightly higher credit score than young millennials. Prime scores typically qualify borrowers for lower interest rates on loans.

The data is based on consumers ages 18 to 20 who have credit files, meaning their name is on a student loan, credit card, auto loan, mortgage or other type of credit account that has been reported to Experian. In many cases, 18- to 20-year-olds might have opened the account jointly with someone else, such as a parent.

Experian’s findings offer lessons from Generation Z for millennials and others:

Pay in full every month

Paying your credit card balance on time and in full each month keeps you out of debt and can save you hundreds of dollars per year in interest and fees. Two in three members of Gen Z who have credit cards pay them off in full each month, compared with fewer than half of young millennials.

Build a strong credit history

Members of Gen Z are most likely to have a credit file because of student loans, followed by auto loans and credit cards. By making regular payments on these accounts, they’re building a solid credit history. “Those decisions they make today are going to be important for their future credit behavior and access to lower rates,” Motley says.

Use online tools

“They are very savvy. They have the internet. Boomers and Gen X didn’t have that available,” Motley says. As a result, members of Gen Z have more resources to learn the basics of responsible credit use — or at least they know where to look.

Gen Z might be young, but their baby steps into the world of credit look firm.


Kimberly Palmer is a staff writer at NerdWallet, a personal finance website. Email: kpalmer@nerdwallet.com. Twitter: @KimberlyPalmer.