Are Consumers in Generation Z Changing Debt Management Trends?
Consumer debt affects adults of all ages, from young adults to the elderly. When it comes to tracking personal bankruptcy filings, many older adults past the age of retirement are filing for bankruptcy, yet younger adults also file for consumer bankruptcy with some frequency. There may be a significant difference in the way that very young adults who are part of Generation Z manage their debts in comparison with adults of other generations, according to a recent article in Ladders. That article cites a Lending Point study that reports “Gen Z may be just getting into their credit-using years, but they are already showing significant differences in their credit profiles from the Millennials and GenXers that preceded them.”
In short, the article intimates that Generation Z adults may be on a trend to have less difficulty managing consumer debt, and thus ultimately could be less likely to file for bankruptcy than consumers in other generations.
Generation Z Consumers Have Higher Credit Scores
One of the ways that the Lending Point study assessed Generation Z debt management in comparison to consumers in other generations was by looking at average credit scores. In analyzing approximately five million loan applications received between July 2018 and July 2019, the study found that “Gen Z, or those born after 1996, have an average FICO score that is higher than both Millennials and Gen X.”
Since the length of credit is a relatively large factor in determining a person’s credit score, it may be particularly telling that consumers in Generation Z have higher credit scores despite having much lower lengths of credit (or credit profile durations).
Difference Considerations Regarding Debt Consolidation
Another major difference among the generations—or between Generation Z and older generations—is that the consumers view debt consolidation and personal loans much differently. Generally speaking, large numbers of Millennials, Generation Xers, and Baby Boomers view personal loans as an option for debt consolidation. Indeed, almost 75% of people in these generations identified personal loans as an option for debt consolidation, and many had taken out personal loans for this very purpose.
Differently, only about 58% Generation Z consumers reportedly view personal loans as a method of debt consolidation and instead consider personal loans “to cover major purchases, auto expenses, and health care.” In addition, Generation Z consumers are taking out fewer personal loans and have less debt. To compare, the average amount of personal loan debt for a Generation Z consumer is $8,462, while the median amount of personal loan debt for older generations is more than $11,000.
Generation Z Consumers are Less Willing to Take on Debt
Finally, compared to older consumers, those in Generation Z are less likely to take on debt and are more likely to “feel empowered” by “taking charge of their finances.” The article ultimately describes Generation Z consumers as having a “financially conservative mindset,” which likely explains their aims in taking out personal loans and their higher credit scores.
With less consumer debt, consumers in Generation Z may be less likely to file for bankruptcy than consumers in older generations. As consumers in Generation Z age, it will be important to track debt trends and to determine whether the current “financially conservative mindset” prevails.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about managing debt or filing for personal bankruptcy, an experienced Oak Park bankruptcy attorney at our firm can assist you. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
Is it Best to Prevent Elderly Bankruptcy?
Consumer Debt Reaches New High
In short, the article intimates that Generation Z adults may be on a trend to have less difficulty managing consumer debt, and thus ultimately could be less likely to file for bankruptcy than consumers in other generations.
Generation Z Consumers Have Higher Credit Scores
One of the ways that the Lending Point study assessed Generation Z debt management in comparison to consumers in other generations was by looking at average credit scores. In analyzing approximately five million loan applications received between July 2018 and July 2019, the study found that “Gen Z, or those born after 1996, have an average FICO score that is higher than both Millennials and Gen X.”
Since the length of credit is a relatively large factor in determining a person’s credit score, it may be particularly telling that consumers in Generation Z have higher credit scores despite having much lower lengths of credit (or credit profile durations).
Difference Considerations Regarding Debt Consolidation
Another major difference among the generations—or between Generation Z and older generations—is that the consumers view debt consolidation and personal loans much differently. Generally speaking, large numbers of Millennials, Generation Xers, and Baby Boomers view personal loans as an option for debt consolidation. Indeed, almost 75% of people in these generations identified personal loans as an option for debt consolidation, and many had taken out personal loans for this very purpose.
Differently, only about 58% Generation Z consumers reportedly view personal loans as a method of debt consolidation and instead consider personal loans “to cover major purchases, auto expenses, and health care.” In addition, Generation Z consumers are taking out fewer personal loans and have less debt. To compare, the average amount of personal loan debt for a Generation Z consumer is $8,462, while the median amount of personal loan debt for older generations is more than $11,000.
Generation Z Consumers are Less Willing to Take on Debt
Finally, compared to older consumers, those in Generation Z are less likely to take on debt and are more likely to “feel empowered” by “taking charge of their finances.” The article ultimately describes Generation Z consumers as having a “financially conservative mindset,” which likely explains their aims in taking out personal loans and their higher credit scores.
With less consumer debt, consumers in Generation Z may be less likely to file for bankruptcy than consumers in older generations. As consumers in Generation Z age, it will be important to track debt trends and to determine whether the current “financially conservative mindset” prevails.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about managing debt or filing for personal bankruptcy, an experienced Oak Park bankruptcy attorney at our firm can assist you. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
Is it Best to Prevent Elderly Bankruptcy?
Consumer Debt Reaches New High
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