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A recent downpour of news stories, rumor and gossip sounding the alarm that some lending companies have begun scrutinizing the social media accounts of potential borrowers to assess credit worthiness has caused quite quiver in the cyber-grapevine. So far only a few companies have been using this tactic, but questions are being asked. Is this the beginning of a trend in the lending industry? Will it have a major impact on the availability of credit for those with borderline scores, especially for U.S. borrowers? Will the global economy come to a screeching halt because of Mark Zuckerberg? Well, maybe, maybe not.
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Judged By The Company You Keep
According to CNN Money, one lending company, Lenddo, uses a proprietary algorithm to assess a borrower’s Facebook friends to determine if any of them have been late making payments to, well, Lenddo. And if you frequently interact with your deadbeat friend, so much the worse for you. According to the company’s website, they also look at Twitter, Linkedin and Yahoo and consider online behavior patterns. Many might think it unfair to judge a person’s credit worthiness by their Facebook or Linkedin associates, or by the websites they visit, however shocking or bizarre they may be. After all, most people on friend lists are old school friends or even friends of friends one barely knows. But, says Jeff Stewart, CEO and co-founder of Lenddo, "It turns out humans are really good at knowing who is trustworthy and reliable in their community. What's new is that we're now able to measure through massive computing power."
Another lender, Kreditech, gathers data in much the same way from Facebook, Amazon and Ebay. Curiously, it also considers how well an applicant fills out their online application, as well as how much time a borrower spends reading information about the loan (read fine print) on their site. Using all caps, and presumably bad spelling and grammar, can knock off points. If either catches on, a lot of people will be in big, big trouble.
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Hold On Now, Don’t Get ‘Em In A Bunch Yet
No need to fear, says MSN Money (CNN competitor). They point out that these companies specialize in making loans in developing nations, where there isn’t much in the way of credit reporting services. In, say, the Philippines, Mexico, South America and other regions, it makes sense to use an alternative method of determining credit worthiness. There’s no need to do so in the U.S. and other first-world countries with ample credit reporting systems and strict laws.
So maybe it’s not yet time to start dumping those suspicious looking Facebook friends just yet. On the other hand, it certainly couldn’t hurt.
- Lenddo https://www.lenddo.com/
- Kreditech http://www.kreditech.com/
- Relax! Your Facebook Account Won’t Kill Your Credit http://money.msn.com/saving-money-tips/relax-your-facebook-account-wont-kill-your-credit
- Choose Your Facebook Friends Wisely, They Could Help You Get Approved - Or Rejected - for A Loan http://money.cnn.com/2013/08/26/technology/social/facebook-credit-score/index.html?hpt=hp_t2