The deteriorating credit habits of Generation Y - 18 to 28-year-olds - has resulted in a 15 per cent rise since 2003 in those not paying their credit card bill, a new report reveals.

But Generation X - aged 28 to 43 - still leads in not paying the bills.

Figures from New Zealand's largest credit information provider, Veda Advantage, also show that total defaults are up 11 per cent from the March quarter last year.

Phone and internet services had the sharpest increase, up 148 per cent and 100 per cent respectively.

The percentages reflect thousands of people not paying their bills, but Veda Advantage refused to give specific figures, saying they were commercially sensitive.

Veda Advantage director John Roberts said the study highlighted the changing trends among generations.

While those in Generation X were still the worst non-payers, accounting for 37 per cent of those who didn't pay bills and leading credit card and hire purchases default figures, that wasn't the most worrying feature.

The increase in Generation Y defaulters was caused by a lack of financial literacy.

And Gen X's rate of defaulting had fallen from 52 per cent to 40 per cent, narrowing the gap between the two.

Mr Roberts said baby boomers had been "well behaved", most likely because they'd lived through a previous downturn.

The report showed that Gen Y was also the most credit-hungry age group, particularly in applications for credit cards.

This suggested that the increasing default trend was likely to continue.

Flatting situations where people failed to sort out bill payments, or individuals moving from contract to pre-pay without paying for the initial service were likely to be contributing factors.

What younger defaulters might not realise was that defaults stayed on a person's credit record for five years and could affect borrowers' ability to get quality loans at competitive rates.

"That could be for a $30 default," Mr Roberts said.

It was clear that many debtors were "financially stressed" and more defaults were expected as the cost of living increased over winter.

Rising mortgage interest rates, the high price of fuel and rising food prices meant household expenses were likely to be up more than $1000 a month from 2006.