MUMBAI: With as many as 77 per cent of the 119 million new borrowers who self-monitor their credit scores being GenZ and millennials, it’s clear that young people are spearheading the credit revolution in the country today and a whopping 81 per cent of them are from non-metro regions.
According to a report by Transunion Cibil on Thursday, which is the largest credit monitoring agency in the country, around 119 million new borrowers have monitored their Cibil scores as of March 2024, which is a full 51 per cent on-year growth in fiscal 2024.
As much as 71 per cent of women who accessed their Cibil scores for the first time in FY24 are from non-metros, indicating a rapid increase in credit consciousness in these regions. The number of GenZ self-monitoring women has grown 70 percent in FY24.
The report also indicate that young borrowers are becoming more credit disciplined and conscious as the number of GenZ tracking their credit scores grew 1.5x in FY24. As much as 91 per cent of new credit users are millennials and GenZ in FY24.
Younger ones are adopting credit at an earlier stage, recognizing the importance of establishing a robust credit history. GenZ self-monitoring consumers lead the pack with an average of 1.32 products, surpassing the millennials at 1.25 and others at 1.22. On average, self-monitoring consumers tend to hold 1.98 products, significantly more than their non-monitoring counterparts, who average 1.33 products.
Self-monitoring consumers grew by 57 per cent in non-metro regions from April 2023 to March 2024 compared to 33 per cent growth in the metros. Also, 12 per cent more small businesses have tracked their company credit score for the first time in FY24.
Commenting on the findings, the managing director of the agency Rajesh Kumar said, this rise in consumer awareness, especially among youth, women and non-urban consumers, is a promising indicator of sustainable credit growth and increasing financial inclusion.
The report shows a 70 per cent growth in the share of women tracking their credit scores in FY24, indicating that women are not only understanding credit management better but are also becoming more credit-conscious and prioritizing financial planning. Over 72 per cent of new credit monitoring women hail from non-metros.
Stating that high credit visibility is leading to wider financial participation, the report states that consumers are becoming more credit conscious, with results showing that 46 per cent improved their credit profiles within six months of checking their Cibil scores, higher than the 41 per cent seen in non-monitoring consumers.
The report also shows that within three months of checking their score, self-monitoring consumers showed about 6 times increase in opening a new credit line, compared to non-monitoring consumers. Also, 44 per cent of consumers are monitoring their scores at least four times a year.
Post-monitoring, the ownership of two-wheeler loans grew by 50 per cent, consumer durable loans by 41 per cent, gold loans grew by 38 per cent and credit cards grew by 14 per cent. However, personal loans decreased by 16 per cent.
The report further reveals that small businesses checking their credit scores for the first time have grown by 12 per cent in FY24, and 47 per cent of those who self-monitor, maintain good commercial scores.
The report also shows that within three months of checking their score, 32 percent of these small companies applied for a new loan, with commercial vehicle loans, bank guarantees, long-term loans, unsecured business loans and auto loans leading the demand drive.
Borrowers from the hinterland are also driving credit growth and credit awareness as the report finds a notable improvement in the number of people who are monitoring their scores, especially those in non-metros.
Report also shows there were 4.72 million new regional self-monitoring consumers in FY24, signaling the driving force behind the growing credit awareness.
Among the top 10 states with the highest credit monitoring populations are Kerala, Tamil Nadu and Bengal.
As more women understand the implications and possibilities of credit, there are in turn more informed borrowers now. A 70 per cent growth in self-monitoring women consumers shows that they are prioritizing financial planning and taking charge of their credit health.