The basic premise is that unlike generations prior, thin file (those with less than three credit accounts) Millennials have similar income and asset bases as their thick file counterparts (those with three or more credit accounts). Many models and lending strategies are predicated on the long held belief that credit activity and increases in income/assets correspond. Millennials are behaving differently — choosing to pay down their student loan before acquiring new credit.
Modelers and lenders must account for this as Millennials are a massive population in terms of volume and they are entering the phase of their lives where they are more likely to apply for new credit (auto loans and mortgages in particular). This is an opportunity for more nimble lenders to grow market share.
Content shared with permission from VantageScore