Credit outlook for Millennials and Gen Z

1. © 2018 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public. Credit outlook for Millennials and Generation Z

2. Introducing: © 2018 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public. Michele Raneri Experian Crissy Wallace Experian

3. 3 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. #experian 3 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Defining Millennials and Gen Z

4. 4 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Age 51-71 Age 72 or older Age 36-50Age 18-21 Younger: Age 22-28 Older: Age 29-35 Generations are based on date of birth, we will be focused on the youngest groupings Gen YGen Z Gen X Boomer Silent Focus area

5. 5 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. The US census showing the population by age and gender 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100+ Male % of Population Female % of Population * Gen Z marketable 18-21 = 5% U.S. Population Source: Census (2016) Gen Z* YY OY Gen X Baby Boomers SilentMillennials

6. 6 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. While they are both younger, there are still many differences in the generations Gen Z aka Centennial 28% of US, with 5% over 18 – Mainly children of Gen X  Digital-centric  Raised on social web  Communicate with images  Create things  Frugal shoppers Gen Y aka Millennial Over 19% of US – Mainly children of older Gen X and Boomers • Digital-savvy • Raised on the web • Communicate with text • Share things • Luxury shoppers Study from www.Randstad.ca Age 18-21 Younger: Age 22-28 Older: Age 29-35 Gen YGen Z

7. 7 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Today we will be sharing a lot of facts about the younger generation Personal loans Mortgage Alternative data Bankcard

8. 8 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. #experian 8 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Credit trends of younger consumers

9. 9 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. VantageScore® 3.0 Model overview • Predicts risk of borrower – Likelihood of future serious delinquencies (90 days later or greater) – Any type of account • 24-month performance • Score range of 300–850 – Higher scores represent a lower likelihood of risk – Lower scores are higher risk A = Super-prime 781–850 B = Prime 661–780 C =Near prime 601–660 D = Sub-prime 500–600 F = Deep sub-prime 300–499

10. 10 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. As consumers age, they typically become more prime 0% 20% 40% 60% 80% 100% Gen Z Gen YY Gen OY Gen X Boomer Silent Percentofconsumers VantageScore® breaks within each generation Deep Subprime Subprime Near Prime Prime Super Prime

11. 11 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Looking at the averages helps to demonstrate this 636 652 665 679 727 764 550 600 650 700 750 800 Gen Z Gen YY Gen OY Gen X Boomer Silent Average VantageScore® by generation US average = 677

13. 13 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Age 51-71Age 36-50 Gen X Boomer Personal loan originations are dominated by Boomers and Gen X, but Millennials are joining in 1% 21% 34% 39% 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Gen Z Gen Y Gen X Boomer Silent Percentofnewdollarsoriginated Dollars of newly originated personal loans 4Q14 4Q15 4Q16 4Q17 Gen X and Boomer lead new balances

14. 14 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Consumer personal loan balances are increasing, including younger generations $- $50 $100 $150 $200 $250 $300 $350 $400 $450 4Q11 4Q14 4Q17 Millions Personal loan balances Gen Z Gen Y Gen X Boomer Silent Gen Z +57% Gen Y +40% Gen X +35% Boomer +48% Silent +36% Since 2014 Change 2011-2017

15. 15 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Personal loan delinquencies are trending down overall, but younger people still over US average 0% 1% 2% 3% 4% 5% 6% Percent of balances 90-180 DPD Gen Z Gen YY Gen OY Gen X Boomer Silent US Avg As of 4Q17 US 1.32% Gen Z 2.47% Gen YY 2.08% Gen OY 1.51% Gen X 1.43% Boomer 1.08% Silent 1.22%

16. 16 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Drilling down, fintech as a subset of personal loans, younger people are engaged as well Fintech loans 29% 41% 26% 3% 1% Traditional loans 37% 32% 22% 8% 1% Gen Z Gen Y Gen X Boomer Silent Data based on number of loans August 2017, not balances as previously shown Gen X for Fintech with 41% Boomers for Traditional with 37%

17. 17 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Younger generations personal loan behaviors differ GEN Y • Similar VantageScore® • Similar loan amounts • Higher bad rates on traditional • More Fintech loans GEN Z • Similar VantageScore® • Higher traditional loan amounts • Much higher bad rates on traditional • More Fintech loans FinTech vs. traditional by generation Vantage Score® (new PL) Average loan amount 90+ (new PL) Gen Y Traditional 642 $6k 5.2% Fintech 639 $6k 4.5% Gen Z Traditional 631 $3k 8.5% Fintech 636 $1k 5.8%

19. 19 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Bankcard originations are becoming evident for the younger people, older still largest percent 1% 20% 29% 41% 9% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Gen Z Gen Y Gen X Boomer Silent Percentofnewdollarsoriginated Dollars of newly originated bankcards 4Q14 4Q15 4Q16 4Q17 Baby boomers still leading Age 51-71 Boomer

20. 20 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Consumer bankcard balances are steadily increasing across all generations $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 4Q11 4Q14 4Q17 Millions Bankcard balances Gen Z Gen Y Gen X Boomer Silent Gen Z +55% Gen Y +28% Gen X +10% Boomer +22% Silent +57% Since 2014 Change 2011-2017

21. 21 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Bankcard delinquencies for younger people are higher than the US average 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Percent of balances 90-180 DPD Gen Z Gen YY Gen OY Gen X Boomer Silent US Avg US 1.54% Gen Z 2.96% Gen YY 2.33% Gen OY 2.18% Gen X 1.66% Boomer 1.14% Silent 1.75% As of 4Q17

23. 23 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Younger people are beginning to originate mortgages 0.2% 23% 38% 34% 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Gen Z Gen Y Gen X Boomer Silent Percentofnewdollarsoriginated Dollars of newly originated mortgages 4Q14 4Q15 4Q16 4Q17 Gen X originating the most, but younger people are coming into the market 23% of new dollars originated in mortgage were tied to Millennials Age 36-50 Gen X

24. 24 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Consumer mortgage balances are increasing across all generations $- $2 $4 $6 $8 $10 $12 4Q11 4Q14 4Q17 Billions Mortgage balances Gen Z Gen Y Gen X Boomer Silent Gen Z +48% Gen Y +2% Gen X - 4% Boomer +11% Silent +56% Since 2014 Change 2011-2017

25. 25 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. As of 4Q17 US 0.94% Gen Z* 0.00% Gen YY 0.47% Gen OY 0.62% Gen X 1.03% Boomer 0.93% Silent 1.18% Mortgage delinquencies are low for young people, mortgages are not yet widespread 0% 1% 2% 3% 4% 5% 6% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Percent of balances 90-180 DPD Gen YY Gen OY Gen X Boomer Silent US Avg*Removed Gen Z due to sample size

26. 26 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Millennials are entering the mortgage market Gen OY no mortgage 50% Only 15% of Millennials have a mortgage on the credit file, vs. 25% overall Gen OY w/ mortgage 13% Gen YY no mortgage 35% Gen YY w/ mortgage 2%

27. 27 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Millennials with mortgages are heaviest in South and West regions 4% 11% 13% 15% 19% 23% 1% 2% 2% 4% 3% 4% 0% 5% 10% 15% 20% 25% 30% New England Southwest Mid Atlantic Midwest West South No Mortgage Mortgage on File Millennials by region

28. 28 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. 77% of millennials with mortgage are prime or better 21% 56% 13% 7% 1% 0% 0% 10% 20% 30% 40% 50% 60% Super Prime Prime Near prime Subprime Deep Subprime Unscoreable Current VantageScore® for Millennials 5% 34% 15% 33% 10% 3% 0% 10% 20% 30% 40% 50% 60% Super Prime Prime Near prime Subprime Deep Subprime Unscoreable Millennials with mortgage Millennials without mortgage 77% 39%

29. 29 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. There is a significant difference between Millennials with a mortgage and those without Average metrics Age VantageScore ® Total number of trades Total debt Income DTI No mortgage 28 623 8 $19k $33k 11% Have mortgage 31 716 16 $225k $64k 37% X

30. 30 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. #experian 30 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Young people and alternative finance

31. 31 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Traditional credit data Data assembled and managed in the core credit files of the nationwide consumer reporting agencies, which includes: • tradeline information (including certain loan or credit limit information, debt repayment history, and account status) • credit inquiries • information from public records relating to bankruptcies. It also refers to data customarily provided by consumers as part of applications for credit, such as income or length of time in residence and employment. Alternative credit data Data that are not “traditional.” We use “alternative” in a descriptive rather than normative sense and recognize there may not be an easily definable line between traditional and alternative data. Examples include: • Alternative financial service data (short-term / payday loan, rent to own) • Rental payments • Asset ownership • Full file public records • Consumer permissioned data Defining alternative credit data Alternative Credit Data? All information that is FCRA compliant Focus area

32. 32 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Younger people make up one third all alternative finance consumers Gen YY 14% Gen OY 19% Gen X 36% Boomer 26% Gen Z — 1% Average age US: 52 Clarity: 42 Missing 1%Silent 3% 34% Alternative finance consumers Missing 1% Gen Z 1% Gen YY 14% Gen OY 19% Gen X 36% Boomer 26% Silent 3%

33. 33 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Young people across the full credit spectrum use alternative finance 2% 3% 6% 11%13% 13% 13% 14% 19% 24%22% 14% 15% 17% 20% 22% 44% 50% 52% 50% 44% 37% 20% 23% 19% 17% 11% 6% Gen Z Gen YY Gen OY Gen X Boomer Silent Super Prime Prime Near Prime Subprime Deep Subprime 1% 14% 19% 36% 26% 3%% file

34. 34 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Opportunities with Millennials and Gen Z in the credit market Personal loan: Younger people prefer online/Fintech Bankcard: Growing balances, watch bad rate Mortgage: 85% of Millennials do not yet have a mortgage Alternative finance: Over 1/3 of young people use alt finance

35. 35 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. #experian 35 © 2018 Experian Information Solutions, Inc. All rights reserved. Experian Public. Michele Raneri Experian Crissy Wallace Experian Q&A

36. ©2017 Experian Information Solutions, Inc. All rights reserved. Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian [Public. Confidential. Internal. Restricted. – please choose the appropriate category]

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