Good credit or TikTok fame? What's more important to young adults?

NEW YORK — While TikTok continues to make its mark among younger generations, healthy credit is actually at the top of their minds. A survey of 500 Gen Z and 500 millennial Americans reveals that nine in 10 millennials would rather have an “excellent” credit score than 50,000 followers on TikTok.

Even the more internet-enamored Gen Zers would prefer a credit score of 750 or higher than thousands of followers on the social media platform (92% vs. 8%). Results also reveal that 68 percent now pay their bills by phone, and more than half of respondents (54%) have only ever interacted with their credit card or credit score on their smartphone.

Conducted by OnePoll on behalf of Credit Sesame, the survey shows that some young Americans may be late to the credit game — the average respondent only started building credit at age 22. Millennials tend to fall in line with kicking off their credit in their early twenties, as the average millennial opened a bank account at age 21 and got their first credit card and started paying rent around the age of 23. 

Gen Zers, however, opened their first bank account at 19 and both started to pay rent and got their first credit card at 20. Even so, one in 10 Gen Zers don’t have a credit card or credit score.

The survey also shows that this late start to financial education may be responsible for Americans’ knowledge gaps when it comes to money. Forty-two percent would rate their understanding of how credit scores work average to poor and more than two in five (44%) thought Americans’ average credit score was below 650. Additionally, one-third believe that age-old myth that checking your credit score will affect it and 19 percent couldn’t correctly match the definitions of debit and credit.

Interestingly, 65 percent of respondents feel completely in control of their credit score.

“What we found through this survey is that while young people are often misperceived financially, they overwhelmingly understand that having good credit is the key to financial wellness,” says spokesperson Adrian Nazari, Founder and Chief Executive Officer of Credit Sesame, in a statement. “With 42 percent of respondents admitting they have a poor understanding of how credit scores work, we have a huge opportunity to educate and empower the younger generations.”

Overall, 43 percent of respondents prefer to bank online and 28 percent admit they either “always” or “often” feel judged for banking in person. Similarly, 28 percent of Gen Zers “always” or “often” feel judged when using cash to pay, with almost a third of millennials sharing the same sentiment (31%). 

It isn’t just how they pay; 82 percent of respondents admit they struggle to keep up with their friends’ saving and spending habits. This was especially true for millennials, as 69 percent either struggle “very much” or “somewhat.” For Gen Z, only 24 percent fall into the “very much” category, while 40 percent tend to “somewhat” struggle. 

In light of the current economy, respondents tend to be more risk-averse than riskier with their spending (48% vs. 31%) while 27 percent actually believe obtaining access to credit in 2024 will be somewhat easier. This may be due to the fact that increased digital banking (24%) and as well as increased awareness and access to credit scores (20%) have changed Americans’ approaches to spending the most. 

Credit card debt also impacts Americans’ larger goals, such as buying a house (35%), taking a dream vacation (29%), and saving for retirement (28%). However, when it comes to overall financial practices, respondents abide by “time is money” (52%), “save for a rainy day” (46%), and “never spend money before you have it” (42%).

“While it's admirable that the younger generations care deeply about social issues, it's not all they care about,” says Nazari. “They care about building and maintaining a positive credit history, so that they can achieve greater financial independence.“

Survey methodology:

This random double-opt-in survey of 500 Gen Z and 500 millennials was commissioned by Credit Sesame between Dec. 22 and Dec. 28, 2023. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research (AAPOR) and the European Society for Opinion and Marketing Research (ESOMAR).