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Experian Millennial Credit & Finance Survey Report Part I of II
The 2015 Millennial Credit & Finance Survey reveals that millennials view themselves as more digital, experimental, and less loyal compared to older generations, and experience mixed emotions about their financial stability. While many feel knowledgeable about credit, significant gaps exist as they rarely check their scores and often overestimate their credit knowledge. Despite concerns about their financial futures, a majority remain optimistic, with many expressing willingness to switch financial services for better offerings.
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Experian Millennial Credit & Finance Survey Report Part I of II
- 1. 1 EDELMAN BERLAND Experian Millennial Credit& Finance Survey Report Part I October 2015
- 2. 2 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement WHO HOW MANY ACCURACY WHEN HOW Millennials Nationwide (Adults age 19-34) n=1,002 Margin of Error = +/- 3.1% Data Collection Occurred August 14-19, 2015 Online Survey RESEARCH OBJECTIVE: Research Methodology
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- 4. 4 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement • Compared to older generations, Millennials consider themselves to be: • More Digital: They prefer to conduct their banking on mobile and like brands that utilize new technology • More Experimental: They want to see innovation in the industry and they’re willing to try alternative brands • Less Loyal: They are willing to switch to brands that better suits their needs, such as providing lower interest rates, better rewards programs or more free services • Millennials have mixed emotions about their personal finances: • They feel their finances are holding them back from their life goals like traveling the world or buying a home • They feel less financially stable than their parents did at their age, and they worry about being able to support a family, save enough for retirement, pay off their debt or even just become financially independent • In the long run, however, they are optimistic and feel confident about their financial futures • There are significant knowledge gaps with regard to Millennials and their credit: • The majority of Millennials consider themselves to be knowledgeable about credit scores and reports, but they rarely check their credit reports and one in three does not know his or her credit score Key Findings
- 5. 5 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Estimated (Among All Millennials) Estimated (Among Millennials with Any Debt) Actual (Experian Data) Average VantageScore® Score 654 650 625 Average Debt $26,610 $37,820 $52,120 Average Debt (Excluding Mortgages) $12,580 $17,880 $26,485 Q16. To the best of your knowledge, approximately how much debt do you currently have… (Asked if currently have any type of debt, n=705) Q21. And, to the best of your knowledge, what is your credit score? Millennial Financial Snapshot: Perceptions vs. Reality
- 6. 6 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Credit Card Debt Student Loan Debt Auto Loan Debt Home Loan Debt Personal Loan Debt Other Type of Debt Currently Have 38% 36% 28% 20% 17% 14% Average Amount $7,799 $20,878 $12,782 $87,859 $6,788 $4,284 Q15. Below is a list of different types of leases, loans and debts. Please indicate whether you currently have or have ever previously had any of the following Q16. And, to the best of your knowledge, approximately how much debt do you currently have… (Asked if currently have; Credit card debt n=380, Student loan debt n=357, Auto loan debt n=281, Home loan debt n=204, Personal loan debt n=175, Other type of debt n=142) Millennial Financial Snapshot: Current Debt 70% CURRENTLY CARRY DEBT
- 7. Millennials and the“New” Personal Finance
- 8. 8 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Q4. To what extent do you agree or disagree with each of the following statements? Q47. Approximately how many financial mobile apps do you use? (Asked if use mobile device to monitor finances, n=572) 57% use financial mobile apps to manage personal finances Mobile App Usage 48% use free financial services, like Mint, to manage personal finances Free Services Usage They look to tech and free services to help manage their personal finances 3 AVERAGE FINANCIAL APPS USED
- 9. 9 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement They are open to trying alternative financial companies and services Q40. Prior to taking this survey, how familiar were you with alternative or “non bank” lenders? Q41. Which of the following statements comes closest to your view… Q43. Have you ever taken out a personal loan from an alternative or “non bank” lender, such as Prosper, Lending Club or UpStart? (Asked if aware of alternative lenders, n=676; Results shown off total base) Willingness to Use Alternative Services 57% Willing to use alternative companies / services that innovate to better meet needs 39% FAMILIAR WITH ALTERNATIVE OR “NON- BANK” LENDERS 13% HAVE TAKEN OUT A LOAN FROM AN ALTERNATIVE OR “NON BANK” LENDER
- 10. 10 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement They are receptive to using “non bank” lenders for ease, speed and accessibility Q44. Based on your current knowledge of alternative banking, how likely would you be to use an alternative or “non bank” lender in the future? Q45. Which, if any, of the following describe why you would be likely to use alternative lenders? (Asked if likely to use alternative lender, n=473) 43% 41% 41% 38% 30% Easier application process Does not rely solely on my credit score More accessible Faster application & review processes More digitally-savvy Reasons to Use Alternative Lenders (Shown: Among Those Likely to Use) 47% LIKELY TO USE ALTERNATIVE LENDERS IN THE FUTURE
- 11. 11 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement They are willing to switch brands if the services better meet their needs Q11-12. Which of the following statements comes closest to your view… Q10. Which, if any, of the following would make you switch to another financial institution or brand? If another financial institution / brand offered… 47% 43% 42% 38% 35% 32% 31% 25% 23% 23% Better interest rates Better rewards programs More free services Lower ATM fees Better customer service Better identity protection Better online services More physical locations Better mobile app / technology More lenient late policies Top Reasons to Switch Financial Brands46% LOOK FOR NEW FINANCIAL COMPANIES / SERVICES THAT BETTER MEET THEIR NEEDS 77% WILLING TO SWITCH FINANCIAL ACCOUNTS IF THEY LEARNED ABOUT A BETTER ALTERNATIVE
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- 13. 13 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Knowledge Gaps: Credit Scores & Reports Q1. How knowledgeable do you feel about each of the following aspects of personal finance? Credit scores & reports Q17. How often do you check your… Credit score? Q21. And, to the best of your knowledge, what is your credit score? Q22. Below is a series of statements about credit. To what extent do you agree or disagree with each of the following statements? Perceived Knowledge about Credit Scores & Reports 71% KNOWLEDGEAB LE 32% DO NOT KNOW THEIR CREDIT SCORE 61% CHECK THEIR CREDIT REPORT LESS THAN EVERY 3 MONTHS 67% HAVE QUESTIONS ABOUT HOW CREDIT REPORTING AGENCIES CREATE CREDIT SCORES 29 MILLENNIALS OVERESTIMATE THEIR CREDIT SCORE BY 29 POINTS Vs.
- 14. 14 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement 11% 15% 18% 22% 23% 29% 37% 12% 16% 19% 24% 28% 31% 35% Assume someone will alert me if there’s an anomaly in my report/if my score is bad Concerned that I will find something negative Unsure how to check my credit report/score Afraid it will hurt my credit score Have never had a problem with my credit in the past Do not think to check my credit report/score Do not feel that it is necessary Top Reasons for Not Checking Credit (Shown: Among Those Who Check Less than Every 3 Months) Credit Report Credit Score Some think checking their credit is unnecessary; others simply do not understand the process Q18. For what reasons do you not check your credit report more frequently? (Asked if checks report less than every 3 months, n=608) Q19. For what reasons do you not check your credit score more frequently? (Asked if checks score less than every 3 months, n=568)
- 15. 15 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement 66% 57% 56% 54% 53% 53% 42% 20% 25% 24% 27% 26% 26% 43% 14% 18% 20% 19% 21% 21% 14% Secure a home loan Secure a personal loan Secure an auto loan Rent a home Lease an automobile Qualify for a credit card Secure a student loan Credit Score Impact on Ability to… Helped No Difference Hurt Already, Millennials feel that their credit has had an impact on their lending and leasing options Q33. To the best of your knowledge, has your credit card history ever hurt or helped you to secure a loan with good terms? (Asked if credit card user, n=669) Q39. In each of the following situations, did your credit score help or hurt your ability to… (Asked if currently have or have previously had; Secure a home loan n=310, Secure a personal loan n=373, Secure an auto loan n=493, Rent a home n=212, Lease an automobile n=277, Qualify for a credit card n=572, Secure a student loan n=527) 47% 27% 25% Credit Card History Impact on Ability to Secure a Good Loan (Shown: Among Credit Card Users) Helped No difference Hurt
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- 17. 17 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Despite having a good handle on their finances, many feel the odds are stacked against them Q4. To what extent do you agree or disagree with each of the following statements? Have a Handle on Their Finances Feel Like They Are “Going It Alone” Feel Like the Odds Are Stacked Against Them 73% Feel like they have a good handle on their finances 59% Feel like they’re going it alone when it comes to finances 57% Feel like the odds are stacked against them when it comes to finances 84% APP USERS 62% HAVE DEBT 60% HAVE DEBT
- 18. 18 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Many worry about their ability to support themselves – or a family – in the future Q6. When you think about your financial future, which TWO, if any, of the following are your greatest concerns? 30% 28% 25% 22% 18% 14% 14% 12% 7% Not being able to support a family Not having enough saved to retire Not becoming financially independent Not being able to pay off my debt Not being able to fund my children’s education Not being able to support my parents as they age Getting my identity stolen Financial setbacks due to future medical costs Losing my savings in the stock market Top Concerns for Financial Future (Shown: Top Two Choice)
- 19. 19 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Overall, they feel optimistic about their financial futures and ability to pay off their current debt Q4. To what extent do you agree or disagree with each of the following statements? 83% Say being “debt free” is an attainable goal “Debt Free” is an Attainable Goal 71% Feel confident about their financial future Confident about Financial Future 70% CURRENTLY CARRY DEBT • 85% App user • 81% Check Credit Often • 77% Men
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- 21. 21 © Copyright2015 Daniel J Edelman Inc. Intelligent Engagement Demographics Totals may not add to 100% due to rounding Category Subcategory Percent Gender Male 50% Female 50% Age 19-24 42% 25-34 58% Race / Ethnicity White 58% African American 14% Hispanic 20% Asian American 6% Other 2% Region Northeast 18% Midwest 21% South 38% West 23% Category Subcategory Percent Education High school or less 23% Some college 38% Bachelor’s degree 34% Post-graduate 5% College Student Status Full-time 40% Part-time 11% Not a student 49% Marital Status Not married 61% Married 38% Income Less than $50K 49% $50K to less than $100K 37% $100K or more 11%
Editor's Notes
- #3 Survey Methodology The data points referenced above come from a study commissioned by ConsumerInfo.com, Inc., an Experian company, produced by research firm Edelman Berland and conducted as an online survey nationally among a representative sample of 1,002 Millennials (adults age 19-34). Interviewing took place from August 14-19, 2015. The margin of error is plus or minus 3.1 percent.