Gen Z Turns Credit Building Into a Financial Power Move

For many consumers, smart credit use is more than convenience, it’s a way to unlock financial opportunity. As shown in “Consumer Credit Economy: Strategy vs. Spontaneity — Navigating the Great Credit Divide,” a joint effort between PYMNTS Intelligence and i2c, building or improving a credit score ranks as the leading motivation for seeking a new credit card.

Among consumers without an active card, 26% cite credit building as their primary reason for wanting one, ahead of rewards, convenience or managing cash flow.

That motivation spans product lines. Sixteen percent of consumers without a buy now, pay later account say they would use one to improve their credit scores, while 1 in 10 express the same interest in payday loans or mortgages.

Across the credit landscape, using products strategically to strengthen financial standing is a dominant theme, particularly for Generation Z, prime and subprime borrowers, who see credit-building as a stepping stone to greater opportunity.

Virtuous Cycle

The findings highlight a virtuous cycle: responsible card use can build a stronger credit profile, opening the door to more favorable terms, lower interest rates and higher limits. Yet breaking into that cycle can be difficult when perceptions stand in the way.

PYMNTS found that 42% of consumers doubt they would be approved for a new credit card, nearly three times the actual rate of denials among those without cards (just 15%). And 1 in 3 households earning more than $100,000 annually still believe they would “probably or certainly” be denied.

This perception gap, what might be called a “psychological access gap,” means millions of creditworthy consumers self-select out of the market, never applying in the first place. For banks and issuers, that represents both a missed opportunity and a call to action. Educating consumers about actual approval odds and promoting flexible, transparent credit products could help close the gap and attract new, loyal customers.

Strategic use of credit also defines how consumers manage day-to-day spending. The report shows that 53% of consumers who used credit in the past 90 days did so mainly for planned purchases, while 31% used it for a mix of planned and spontaneous ones. Millennials and Gen Z are far more likely than older cohorts to turn to credit for unplanned expenses. The data shows that 22% of millennials, for instance, use cards spontaneously, underscoring the link between flexibility and financial management.

As credit experience grows, strategy takes shape. Among consumers with multiple cards, 37% of those with super-prime credit scores say they select which card to use based on rewards or benefits, compared with just 11% of subprime consumers. Baby boomers and Gen X consumers are also likelier than younger generations to choose cards strategically, while Gen Zers and millennials lean toward convenience. The difference suggests that as credit profiles mature, so does the sophistication of card use, and that helping consumers reach that level can deepen issuer loyalty.

Credit building, in this context, becomes not only a financial milestone but also a loyalty strategy. Consumers who use cards to raise their credit standing tend to stay with issuers that make that progress possible. The report notes that flexibility and personalization, such as cards that allow users to toggle between earning rewards and paying lower interest rates, appeal to 59% of consumers overall, and even more among younger demographics.

These design features align financial incentives with behavioral ones, turning credit building from a daunting chore into a manageable, motivating process. By designing products that empower consumers to build credit with confidence, issuers foster financial inclusion, cultivate lasting relationships rooted in trust, transparency and shared growth.