The youngest borrowers are tapping credit more than their millennial counterparts did at the start of their borrowing histories, and the generation also has higher delinquency rates.

A new TransUnion report compares what’s known as generation Z with millennials’ credit experience a decade earlier. It points out that both faced economic crisis, millennials the Great Recession and generation Z the pandemic, though Z is also grappling with high interest rates and stubborn inflation.

Today’s new borrowers – TransUnion studied 22 to 24 year olds – are consequently tapping credit at greater levels than millennials did 10 years ago, according to the research. They’re both opening more lines of credit and are borrowing more money, plus falling into delinquency at higher rates, the study found.

Automotive loans are among the credit sources generation Z cohorts are tapping the most. Thirty percent of its 22 to 24 year olds had auto loans as of the fourth quarter, compared to 25% of millennials 10 years earlier. Z borrowers’ auto loan balances were also up 14% over millennials’ inflation-adjusted balances a decade before.

“This is a demographic that is younger and newer to the workforce and accordingly, is likely commanding a lower salary at an earlier point in their career,” said TransUnion Executive Vice President and Head of Financial Services Jason Laky. “As long as inflation remains elevated and the cost of goods remains so as well, balances across products such as credit cards, personal loans, and auto are likely to continue to grow.”

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