According to some experts, you might want to reconsider who you choose to add as your friend on Facebook. We know that banks pay close attention to your credit score when deciding to give you a loan. We also know that credit scores can impact other things, like your ability to get an apartment or a job.
According to CNNFN.com, your social media friendships are also a good indicator of whether or not you are truly credit-worthy.
Lenders are starting to use this information to determine if someone is worth lending money to. Companies like Lenddo say that if you are Facebook friends with someone who was late paying the company back, then you are a greater credit risk. This is doubly true if you interact with this friend on a regular basis.
“It turns out humans are really good at knowing who is trustworthy and reliable in their community,” said Jeff Stewart, a co-founder and CEO of Lenddo. “What’s new is that we’re now able to measure through massive computing power.”
Another company in Germany, Kreditech, says that it uses thousands of datapoints to determine a client’s credit-worthiness, including how long you look at the online application before signing it. They also say that if you fill out the information in all caps, you are a greater credit risk than you would be otherwise. But these are just two of 8,000 pieces of information they use to decide if you’re going to pay them back or not.
Another company called Kabbage, allows borrowers to link their Facebook and Twitter accounts to their site, which gives an increase in your credit score. This allows the company to really study you more closely. They also say that this shows that your business is on point.
“Someone who’s paying attention to Facebook and Twitter channels to deal with customer service is more likely to be on top of other parts of their business, too, like inventory and shipments,” the company said in a statement.
Some financial experts are not happy with the use of social media data to determine credit-worthiness. John Ulzheimer from CreditSesame.com, says that the social data is not a good indicator of a client’s ability or willingness to pay. He says that those who are aware of the system can manipulate their social media data to make themselves look like better applicants. He warns against going into this new territory too boldly, for it can lead to serious problems.
“To me, using social media is a little bit dangerous,” Ulzheimer said.