Young South Africans are actively contributing to key sectors of the economy, yet they remain underrepresented in the credit market, according to Experian’s latest Consumer Default Index (CDI) for Q1 2025. While the CDI for the total market has improved by 14% year-on-year, the report highlights persistent barriers that avert youth from building financial independence through responsible credit access.
The CDI Youth measure – an indication of first-time technical arrears amongst consumers in youth segments, typically under 30 – improved significantly over the past year, decreasing from 7.55 in March 2024 to 5.76 in March 2025. This positive shift in CDI is primarily influenced by a more cautious lending environment, which has led to restricted credit supply.
“The Q1 2025 CDI data provides a critical lens into the evolving credit profile of young South Africans. While the improvement in youth CDI might seem like good news, our analysis indicates it’s more a reflection of limited credit availability,” says Jaco van Jaarsveldt, Head of Commercial Strategy and Innovation at Experian. “This means that many young South Africans do not establish a healthy credit history, which is vital for their long-term financial independence. We need to explore how to responsibly open doors for this critical demographic, facilitating financial and credit inclusion in an environment that is increasingly looking to non-traditional ways of assessing consumers.”
Youth economic participation and credit market access
An analysis of self-reported employment at the time of credit application shows that many young consumers are actively participating in key sectors. Notably, a significant concentration of youth employment is observed in the Wholesale & Retail Trade and Agriculture sectors, indicating their contribution to these vital areas of the economy.
Despite their active economic roles, young South Africans face barriers in accessing the credit market. Representing nearly 24% of the adult population, the youth segment (consumers around 30 years and younger) accounts for only 9% of the total credit market, holding just 3% of outstanding debt. Vehicle Asset Finance (14%) and Retail Loans (10%) are the most common credit products for youth, reflecting their current financial needs and market accessibility. In contrast, youth only hold 1 % of the Home Loans market, underscoring the long-term financial milestones that remain largely out of reach for many.
“Our data outlines where young people are participating in the economy and the types of credit products they can access,” adds van Jaarsveldt. “The limited representation of youth in higher-value credit segments like Home Loans highlights the need for innovative solutions that can bridge this gap and support their long-term financial aspirations.”
Young South Africans typically exhibit a higher CDI compared to the broader population, reflecting their relative financial vulnerability and evolving experience in managing credit. However, the post-pandemic tightening of credit risk policies has led to a decline in new credit issuance to younger cohorts, indirectly contributing to lower default rates.
Other nuances are highlighted within youth segments, including FAS Group 6 (Yearning Youth), one of the less affluent consumer groups that continues to face significant challenges in securing credit due to their risk profile. Conversely, FAS Group 3 (Stable Spenders) also includes sub-segments of youth consumers that are slightly more affluent and thus show relatively better performance but still navigate constrained access to credit.
Overall CDI Trends Continue to Reflect Cautious Lending Environment
The broader CDI remained stable quarter-on-quarter at 4.04 as of March 2025, despite persistently high interest rates and rising living costs. Year-on-year, the composite CDI showed a marked improvement, dropping from 4.69 in March 2024, a relative improvement of 14%. This positive trend is partly attributed to the introduction of the two-pot retirement system, which has provided consumers with additional liquidity to manage debt obligations.
Notably, all product categories saw year-on-year improvements in CDI, with Home Loans and Personal Loans showing the most substantial gains, improving by 18% and 16%, respectively. However, record-high credit applications met with stringent approval processes indicate that lenders remain cautious in extending credit, particularly to higher-risk segments such as youth.
“Experian remains committed to enabling a more inclusive financial landscape where young South Africans can responsibly access the tools and credit needed to achieve their aspirations. Through initiatives like our free web-based app, Up powered by Experian, we are actively working to build a future where every individual has the chance to thrive and participate fully in the economy,” van Jaarsveldt concludes.
Access Up powered by Experian, at www.up.experian.co.za.