A recent study conducted by Paisabazaar reveals a major generational shift in the credit behavior of Indian consumers, with young Indians beginning their credit journeys significantly earlier than previous generations. This shift reflects easier access to credit, changing mindsets, and the growing influence of digital financial services.

Younger Credit Starters: A 15-Year Drop in Age

According to the study, individuals born in the 1970s typically availed their first credit product in their late 30s to early 40s. However, those born in the 1990s start their credit journey in their mid-20s, reflecting a drop of over 15 years in the average age of first-time credit adoption. This trend continues with consumers born after 2000, who often begin their credit journey around age 22.

This significant reduction in entry age indicates that credit has become more accessible and normalized for younger Indians, driven by digital financial inclusion, increased financial literacy, and evolving consumer aspirations.

Changing Credit Product Preferences

The study highlights that the types of credit products preferred to initiate credit use have also evolved. Earlier generations mostly relied on secured loans like home loans or auto loans to enter the credit ecosystem. In contrast, the 1990s-born generation typically begins with unsecured credit products, such as credit cards, personal loans, and consumer durable loans, often between ages 25 to 28.

For the post-2000 generation, small-ticket loans and Buy Now Pay Later (BNPL) products are becoming common starting points. These products provide flexible repayment options and easier approval processes, aligning with the spending habits and preferences of younger consumers.

Earlier Access to Home and Business Loans

Another notable finding is the earlier average age for accessing home loans and business loans. The average age for home loans has fallen from 41 (for those born in the 1970s) to 28 (for those born in the 1990s). Similarly, business loans are now taken at an average age of 27, down from 42. This trend reflects India’s rising entrepreneurial spirit and enhanced availability of MSME lending products, supported by digital lending platforms and government initiatives.

The Role of Digital and Aspirational Consumers

Ms. Radhika Binani, Chief Product Officer at Paisabazaar, notes that today's young consumers are more aware, aspirational, and digitally savvy. They use credit not only for essential needs but also to fulfill lifestyle goals and ambitions. The confidence and diversity in credit use among youth are reshaping India’s financial landscape.

This transformation in credit behavior aligns with broader trends of financial inclusion and the digitization of banking and lending services, enabling quicker, more convenient access to credit products for younger populations.

Implications for Financial Services and Policy

The trend of younger credit adoption presents both opportunities and challenges for lenders and policymakers. Financial institutions can leverage this shift by designing credit products tailored to the needs of younger consumers, emphasizing digital convenience, transparency, and flexibility.

Meanwhile, regulators and consumer protection bodies need to ensure responsible lending practices to safeguard young borrowers from over-indebtedness and misuse of credit. Financial education and awareness programs are crucial to sustaining healthy credit habits among this demographic.

Conclusion

The Paisabazaar study clearly demonstrates a fundamental shift in India’s credit landscape, with young consumers starting their credit journeys much earlier than before. The rise in unsecured lending, digital financial services, and changing lifestyle aspirations have collectively driven this trend.

As India’s youth continue to embrace credit confidently and diversely, the financial ecosystem must evolve to support their needs responsibly, unlocking the potential for greater economic growth and inclusion.

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