Open Lending Corporation and TransUnion released a new study on the borrowing habits and credit outlook for Millennials and Gen Zers.

Using data from over 4 million U.S. consumers, the report illustrates new-to-credit borrowers’ upward credit trajectory with insights into lending patterns and preferences.

The report underscores the potential value Millennials and Gen Zers can bring lenders, with key findings showing:

• Millennials and Gen Zers are poised and quick to advance: Data revealed that 30% of Millennial and Gen Z thin-file consumers moved up credit tiers within two years compared to 22% of Gen X or older thin-file consumers.
• Younger consumers are loyal consumers: Two out of every five Millennial and Gen Z thin-file consumers who received an automotive loan at a bank or credit union returned to the same type of financial institution for their next product and often with a higher credit score (VantageScore 4.0) than returning thin-file consumers from older cohorts.
• Automotive loans are a priority: Demand for automotive loans is unlikely to dissipate, as 74% of consumers who open an automotive trade line as their second product are replacing an existing vehicle or adding an additional vehicle.

“Many financial institutions are hesitant to extend loans to borrowers with thinner credit files and lower credit scores, who are often Millennials and Gen Zers,” said Kevin Filan, SVP of marketing at Open Lending. “However, this strategic consumer segment shows immense potential for upward credit mobility compared to their older counterparts. The financial institutions that intelligently address these ‘emerging prime’ borrowers through comprehensive data analysis and decisioning can generate higher-yielding loan opportunities and long-term customer loyalty.”