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52 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA 5.8 Million Opened First-Ever Lines of Credit in 2021 New-to-credit consumers are on the rise, with credit cards being the most common option. F irst-time credit users, also known as new-to-credit (NTC) consumers, have been found to be just as much of a risk as consumers with an established credit history—if not a little better—according to new data from the credit bureau, TransUnion. A global study entitled "Empowering Credit Inclusion: A Deeper Perspective on New-to- Credit Consumers" gives reassur- ing hard data to lenders in both the established and developing credit markets so they can extend additional credit products to these consumers without a correspond- ing rise in delinquency rates. Covering not only the United States, but Brazil, Canada, Colombia, Dominican Republic, Hong Kong, India, the Philippines, and South Africa, the study focused on subjects who had no prior credit history with the bu- reau when they opened their first- ever line of credit and continued examining their behaviors and performances for the following two years. "A particular focus around the topic of financial inclusion is credit inclusion—the ability of consumers to access traditional lending products, such as credit cards, mortgages, and personal loans. These products serve as a means to financial mobility for consumers and can be a gateway to a better quality of life, en- abling homeownership, business formation, and wealth creation," said Charlie Wise, co-author of the study and Head of Global Research at TransUnion. "The more consumers who can partici- pate in credit markets in a region, the greater the opportunities for broad economic inclusion. The data from our study demonstrate that new-to-credit consumers are often good risks who are hungry for credit and will show loyalty to those financial institutions that offer them their first credit accounts." In the United States alone, 5.8 million consumers opened their first-ever line of credit in 2021, made up largely of the Gen Z at 59%, followed by millennials at 21%, Gen X at 12%, followed by 7% of baby boomers. The study found overall that these consum- ers were generally good risks when compared to a counterpart with an established file. The study also found that the most common type of credit line NTC consumers took out was a credit card, not only in the United States but in other countries as well. "In nearly every region, depending on risk tier or time period of origination, instances occurred in which NTC borrow- ers had lower delinquency rates on newly opened credit cards than established borrowers," said the study. "In the U.S., on sub- sequent credit card originations after opening their first account, NTC consumers had slightly higher delinquency rates than credit-served consumers in the same near prime and prime score ranges, though the differences are small enough to make the NTC segment a potentially attractive segment for lenders looking for profitable growth." Further, the study found that new and unforeseen expenses were the primary driver for open- ing a line of credit. A majority of NTC consumers across all regions, with the exception of India, reported receiving a credit product at the first institution where they applied—without needing to go to multiple lenders. In the United States, 54% of NTC borrowers reported receiving a credit product from the first insti- tution where they applied. "New-to-credit borrowers around the globe and in the United States will play a large role in the growth of many lenders' books of business," said Michele Raneri, co-author of the study and head of U.S. research at TransUnion. "Banks, credit unions, and other financial insti- tutions who use alternative data while providing products, chan- nels, and a positive onboarding process, will likely be the ones who succeed in building loyalty with this segment of the popula- tion."