The number of people who have never obtained a loan in any form before has grown over a four-year period ended in 2017 and that of this number, some 60 percent come from that age group collectively known as the millennials, from only 40 percent four years prior.
This was learned from a report provided by Transunion Philippines on Wednesday when it said the demographic represents a market that has never been exploited fully by any of the country’s financial services providers.
The millennials, according to Transunion Philippines, a credit bureau, belong to that group aged from 21 up to 37.
According also to Transunion officials, the increase in their number is a trend that has risen over the last four years and has continued to grow in prominence nationwide.
Officials said so-called new-to-credit or NTC accounts are consumers who have no borrowing or payment history from loan facilities such as credit card accounts or personal, auto, or mortgage loans.
Banked individuals with checking or saving accounts but without loans or a credit history in TransUnion’s database are also considered NTC. The increase in demand for financial services among millennials is a result of a number of converging factors.
Technology is a major driving force in the awareness and use of financial services today, with young professionals looking to benefit from their improving finances and the access to additional services and products it brings. Lenders are also becoming more advanced in the way they view those who are NTC, utilizing scores and services provided by companies like TransUnion to assess their credit worthiness and ability to repay.
“Millennials are now at a stage in their professional careers where they have the ability to access services that can help them with their finances. The existence of technology that enables them to be aware of such services, coupled with the ease by which they can apply, results in them having more drive in gaining credit and the many benefits it can bring to their economic lives,” said TransUnion Philippines President and CEO Pia Arellano.
TransUnion believes that millennials, and their increased awareness of their finances, is paving the way for greater financial inclusion for generations to come. Millennials are becoming more open at an earlier stage in their lives regarding their ability to access financial services. As each generation gets more comfortable with the use of technology and obtaining credit, this practice becomes more common, better understood and better serviced by an increasingly sophisticated and tailored lending market.
Having had no previous record of creditworthiness, NTC consumers have historically been ignored or difficult to underwrite for prospective lenders. Increasingly, lenders are seeking new solutions and as in the case of millennials, have started using TransUnion’s specially designed score developed using comprehensive bureau data from different financial institutions. This NTC score allows TransUnion’s members to efficiently assess risk and better understand its customer’s financial position when extending credit. It empowers them to be more confident in making informed decisions that will create opportunities, both for their business and the consumers they lend to.
“These advancements are good news because they further drive financial inclusion across the Philippines and is indicative of a growing generation of consumers that has the need for such products and services. This puts our economy in a good position as it increases the exchange of goods and services that will set economic activity on an upward path,” Arellano said.
TransUnion believes this momentum for credit is being driven by an increased awareness of the benefits that it can bring to the lives of the everyday Filipino. By advocating financial literacy among more Filipinos, it hopes to correct negative impressions on how responsible lending works and dispel fears that it will only result in further debt that will disadvantage people financially.