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Understanding Gen Z’s Financial Landscape
The financial habits and challenges of Generation Z, those aged 18 to 26 as of Q3 2023, are often misunderstood. Despite varying media portrayals, Experian data reveals that Gen Z’s debt is increasing at a similar rate to other generations. This article delves into the financial realities of Gen Z, based on aggregated data from Experian.
How Much Debt Does Gen Z Have?
Contrary to popular belief, Gen Z is not accumulating more debt than other generations. Economic factors like inflation and the cost of living are contributing to increased debt balances for all consumers, including Gen Z.
Generation Z Debt Balances vs. All U.S. Consumers
For some types of consumer debt, Gen Z balances are about half that of the overall consumer population. For instance, the average student loan balance for Gen Z is $21,574, compared to the U.S. average of $38,787. However, big-ticket items like cars and houses are significant contributors to their debt.
Average Gen Z Credit Scores Continue to Rise
The average FICO® Score for Gen Z was 680 in Q3 2023, placing them in the “good” range. This score is just 35 points short of the national average of 715, indicating responsible credit management among young consumers.
Most Gen Z Consumers Have a Credit Card, Lower Balances
As of Q3 2023, 86% of Gen Z consumers with a credit score have at least one credit card. Their average credit card balance is $3,262, which is lower than that of older generations. This indicates a cautious approach to credit usage.
Gen Z Drivers Carry an Average Auto Loan Balance of $20,305
Gen Z drivers have an average auto loan balance of $20,305, close to the national average of $23,792. While car prices have increased, younger consumers are managing their auto loans effectively.
Gen Z’s Average Student Loan Balance of $21,468 Will Likely Rise
More than half of Gen Z is pursuing higher education, leading to an average student loan balance of $21,574. This figure is expected to rise as more Gen Zers pursue advanced degrees.
Generation Z Embraces Buy Now, Pay Later
Gen Z is quick to adopt new financial technologies like Buy Now, Pay Later (BNPL) plans. This trend is also catching on with millennials, indicating a shift in how younger generations manage their finances.
Gen Z’s Bumpy Path to Homeownership
Homeownership remains a challenge for Gen Z, with many opting to rent. High mortgage rates and limited housing options make it difficult for young consumers to buy homes. However, reporting rental payments to credit bureaus could help improve their credit scores.
At O1ne Mortgage, we understand the unique financial challenges faced by Gen Z. Whether you’re looking to buy your first home or manage your existing debt, we’re here to help. Call us at 213-732-3074 for personalized mortgage services tailored to your needs.
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