5.7 million Australians are millennials, making up almost a quarter of the total population.
A new report released yesterday investigated the knowledge and attitudes of millennials towards credit.
The Customer Owned Banking Association (COBA) commissioned report by Good Shepherd Microfinance, TAKE CHARGE: CREDIT REPORTING and millennials noted that they show a “significant lack of awareness of comprehensive credit reporting (CCR) and what it might mean for them” although they are prepared to change once they realise how financial data can affect them.
COBA CEO Mark Degotardi said, “The report reveals some valuable insights and attitudes from younger Australians to their credit history and on managing expenses.
“Research indicates that for younger Australians comprehensive credit reporting wasn’t a burning issue but once they learnt more, they saw the benefits of this system and in many cases resolved to make positive changes.
Australia’s credit reporting framework has recently shifted away from a negative only reporting system to CCR.
The changers enable lenders to report additional information about borrowers including repayment history.
Polling of 18-34 years olds accompanying the report found that 64% had not heard of or didn’t understand the term ‘credit report’ and 73% were not aware of the CCR changes.
The report stated: “These findings are concerning since it is the millennials, making up around 25% of the population, who will be the largest wave of consumers entering the credit market for ‘big ticket items’ including houses and cars; yet, it also highlights an opportunity.”
The results also revealed that millennials are reward driven: 72% liked the idea of getting a better deal because of a positive score; more than half were worried by missing out on a good deal if they had a bad credit report.
58% said they wanted to learn more about CCR and find out what their credit score was while around half intended to make more effort since they could see the benefit of their credit file for their future.
The report said millennials want to hear three simple messages about CCR:
- Your credit and other financial decisions follow you
- There are consequences to poor decisions that can impact your ability to get the things you want
- There are rewards from having a good credit history such as a better interest rate
“With a focus on the customer and community, we believe customer owned banking is well placed to partner with millennials in large numbers and help them meet their changing needs in the future, including home ownership,” Degotardi said.