Consumers born after 1996, generally known as “Generation Z”, have better credit profiles at this stage in their lives than people from older generations, according to a new study from LendingPoint that looked at more than 5 million near-prime loan applications.
The study found that Gen Zers have an average FICO score that’s higher than both millennials and Gen X. Those in Gen Z have an average Fico score of 637, versus just 629 for millennials and 632 for Gen Xers.
“This is especially interesting when you consider that how long you’ve had credit is a key factor when it comes to credit scoring,” LendingPoint said in its analysis. “Even with duration of credit use playing a role in FICO scores, Gen Z is off to a strong start in building their credit profile.”
One reason is that Gen Zers tend to be more cautious about their personal finances, the study found.
“As children, their formative years were dominated by the Great Recession, and they watched as their parents dealt with financial uncertainty and job insecurity,” LendingPoint noted. “As a result, they don’t borrow less, just differently.”
Some 89% of Gen Zers say they feel more empowered by planning for their financial future, while another 64% have already started researching about financial planning.
Gen Zers may also be more likely to think through their purchases than older generations, as 72% said cost is the most important factor with any purchase they make.