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Uncovering Gen Z: What Makes the Youngest Generation Tick

Matt Fabian
Blog Post03/03/2020
image showing Uncovering Gen Z: What Makes the Youngest Generation Tick

Move over Millennials. With Generation Z consumers now entering the credit market, their collective purchasing power and demand for credit is rapidly increasing. Lenders need to understand the behaviours and dynamics of this age group if they want to get ahead of the game. Our latest study uncovers some telling information that can help lenders meet the credit needs of and better market to this important population.

Who is Gen Z and why should lenders consider them?

Gen Z (defined in this study as individuals born in or after 1995) are the first consumers who have lived their entire lives in the digital economy. As a result, Gen Zers are accustomed to having information at their fingertips. They expect speed, and seamless, easy experiences across digital and physical channels. Acquiring Gen Z customers while they’re young can help position financial institutions to build loyalty before credit milestones, such as car or home ownership are reached.

To help lenders better understand this segment, TransUnion conducted a study of credit-active consumers in seven countries across the globe to see what makes them tick. Here are three important considerations that help lenders gain insight into serving Canadian Gen Z consumers more effectively:

They’re credit active — and creditworthy

Despite their age, Gen Zers already participate in the credit market. Of the 8% of Gen Z Canadian consumers who are 18 and above, 63% are already credit active, putting them just behind their U.S. counterparts:

credit active — and creditworthy consumers


Lenders may erroneously believe that all (or at least most) Gen Z consumers are in the subprime credit tier because they lack substantial credit histories However, when compared to the overall credit-active population in Canada, Gen Zers more likely to be near prime or prime, and 50% have credit scores in the prime and above risk tiers. Gen Z consumers appear to have healthy credit habits as they continue to build their financial histories.

They may have different goals than Millennials

Whereas Millennials graduated from college or started their careers in the midst of the historic recession in the late 2000s, many Gen Z consumers during that era were in their formative childhood years and witnessed their parents and relatives struggle financially. Presumably, perspectives and behaviours differ between the groups, likely as a result of these different experiences. This may impact how Gen Z will interact with financial institutions. The Deloitte Global Millennial Survey 2019 found a greater percentage of Gen Z consumers aspire to or prioritize traditional milestones:

  • 56% of Gen Z consumers want to earn high salaries or be wealthy versus 52% of Millennials
  • 52% of Gen Z consumers want to buy homes of their own versus 49% Millennials
  • 45% of Gen Z consumers want to have children and start families versus 39% of Millennials

Credit cards are king (and being used responsibly)

While some may believe this mobile-first, digital native generation prefers loan products from FinTechs, credit cards appear to be the most widely held credit product for Canadian Gen Zers:

Credit cards are king and being used responsibly


Because lenders offer smaller credit limits on cards to these new-to-credit consumers, Gen Z utilization rates are high, making it an attractive, easy-to-manage credit vehicle. Importantly, they’re using credit cards prudently, with low median balances per trade of just $235. The added burden of student loans doesn’t seem to affect their ability to access credit cards either: 28% of borrowers have a student loan with a median balance per student loan trade of $9,191, yet nearly all (99.8%) credit-active Canadian Gen Z borrowers still have a credit card.

How lenders can serve this youngest generation

The biggest challenge of serving Gen Z is their lack of traditional credit records, which lenders typically use to make risk decisions. As more Gen Z consumers enter the market, it’s important to use trended credit or alternative data to evaluate creditworthiness. By looking at how a consumer has performed over time, lenders can make more informed decisions and give this creditworthy segment access to products and better rates. With our data assets and unique approach to analytics, TransUnion can help organizations assess this potential lending gap.

Read the full study

transunion.ca/genz

Unless stated otherwise, all figures are taken from the TransUnion study Gen Z Uncovered: The credit trends and preferences of the youngest generation.

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