Millenials, or the generation of people born between 1982 and 1996, are widely believed to be redefining India’s consumption story. They are also among the biggest borrowers in the country. According to a report by CASHe, an online digital lending company for working professionals, EMI financing and medical expenses are the top reasons their millenial clients borrow. CASHe is among the many lending platforms that have cropped up in recent years to meet the rising demand for easy access to debt channels.
While easy access to loans gives rise to the concern that borrowers are unaware of the risks and can spiral into a debt trap, this might not be the case with millenials. According to a recent study by TransUnion CIBIL, a credit information company, the number of “self-monitoring" millenials, which refers to those who regularly check their CIBIL score and report, grew by 58% compared to 14% growth among non-millennials. According to the report, 51% of self-monitoring millennials are from Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh and Delhi.
According to Sujata Ahlawat, vice president and head of Direct to Consumer Interactive, TransUnion CIBIL, it’s not just financial literacy that is driving this change, but a shift in the lending ecosystem. “Millenials are becoming aware of their entire journey as borrowers, right from the first loan to buy a two-wheeler and over the following credit cycles. Banks have also become very active in driving this awareness. At the time of the loan application, the lender makes the consumer aware that it is not a single product, but the beginning of entire journey. This way, borrowers start self-monitoring even before they take the loan," she said.
The report also revealed that while self- monitoring millennials have an average CIBIL Score of 740; higher than the non-millennial average of 734. CIBIL scores are calculated based on credit reports which are based on credit history. A CIBIL score can range from 300 to 900, but any score above 700 is generally considered good. As a borrower, if you have been regular with your loan repayments, your credit score is likely to be higher, which can help you secure loans more easily in the future.
But it doesn’t end at self-monitoring. According to the report, credit conscious millenials are also actively working towards improving their credit scores. Within six months of checking their score, 51% of those millennials with a score below 700 have improved their CIBIL score by an average of 65 points.