Millennials Turning Out More Credit-Conscious Than Others
As per the study, millennials work towards improving credit scores
Pune: A recent study by TransUnion CIBIL, a credit information company, revealed that the number of self-monitoring Indian millennials grew by 58% between 2016 and 2018, while credit-conscious non–millennial consumers grew by just 14%. Despite their high appetite for credit, the study also revealed that millennials are one of the most credit-conscious consumer segments in the country and self-monitor their credit scores regularly and have an average CIBIL Score of 740.
While 51% of self-monitoring millennials come from Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh and Delhi collectively, millennials from Gujarat ranked highest when it comes to credit-consciousness with an average CIBIL score of 747. This was followed by Haryana at 743, and Rajasthan at 742.
Featuring at the bottom of the list was Delhi with an average CIBIL score of 734 and Tamil Nadu at 736.
As per the study, self–monitoring millennials show a preference for unsecured loans, with credit cards, personal loans and consumer durable loans contributing to 72% of all loans availed by this consumer segment. Among secured loans, two-wheeler loans and auto loans had the highest demand, jointly contributing to 9% of the total credit pie.
Speaking about millennial credit behavior, Sujata Ahlawat, VP and Head-Direct to Consumer Interactive, TransUnion CIBIL, said, “It is encouraging to see the rising trend in credit consciousness and good financial behavior exhibited by Indian millennials. As they leverage credit opportunities to achieve their financial goals, it is important that they should be aware of the role that their CIBIL score plays in determining their access to loans at later stages in their lives. It’s also interesting to see that many lenders have started reaching out to this demographic with relevant product offerings. Since many millennials are at the beginning of their credit journey, reaching out to them at the right time will help lenders engage with them throughout their credit life-cycle.”
“On an average, self-monitoring millennials view their CIBIL report or view updates about 6 times in a year. While 64% of them apply for credit within 3 months of checking their score, 34% actually avail of a new credit card and/ or open a new loan account. They now realize the importance of building and maintaining a positive credit footprint and high CIBIL score. This credit awareness will help them be ready to take advantage of lenders’ offers such as lower interest rates while applying for large ticket loans such as home loans,” she added.
Another encouraging insight that was seen was that millennials also demonstrate a conscious effort to work towards improving their CIBIL score. Within six months of checking their score, 51% of those millennials with a score below 700 have improved their CIBIL score by an average of 65 points.