Loan Defaults Decrease for Young South Africans, Access Still a Hurdle: Experian’s CDIx for Q1 2024
The latest data from Experian’s Consumer Default Index (CDIx) for the first quarter of 2024 reveals a positive trend for young South Africans, as loan defaults have decreased. Despite this improvement, access to credit remains a challenge for many in this demographic.
The CDIx measures the default behavior of consumers with various types of loans, and the report shows a significant drop in defaults among the youngest consumer group, known as the Yearning Youth. However, this decrease is attributed to a reduced availability of credit rather than improved financial stability.
Jaco van Jaarsveldt, Experian’s head of commercial strategy and innovation, emphasized the importance of financial literacy and responsible credit options for young South Africans. He noted that while fewer defaults are a good sign, limited access to credit can hinder financial progress.
The report also highlighted a deterioration in the Composite CDI compared to the previous year, indicating that more consumers are struggling to repay their loans. Factors such as rising living costs and high interest rates have put pressure on credit-active individuals, particularly those with secured credit.
Despite a strong market appetite for consumer credit, approval levels remain low, with many applications being rejected due to affordability concerns. Experian’s Up app was mentioned as a valuable tool for managing financial wellness, offering education, budgeting tools, and credit score tracking to empower consumers in making informed decisions.
Overall, the data suggests a need for increased financial literacy and access to responsible credit options for young South Africans to navigate the credit landscape with confidence and unlock their full financial potential.
