Social accounts to determine your creditworthiness

8-5-2015 20:45 | Views: 2462

Banks may soon start monitoring credit records and social media accounts like Facebook and Twitter to decide whether a client is creditworthy or not. A few tech startup companies are already using credit scores like Fair Isaac Corporation (FICO) and social data to decide whether someone deserves to get a loan or not. Lenddo for example looks up your friends list in order to determine your creditworthiness.

If any of your friends on Facebook has a bad loan history with Lenddo, such as paying their loan late for example, Lenddo can reject your loan. If you have a friend on Facebook that has been convicted a crime, your chances on getting approved for a loan by Lenddo are very low. “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,” Lenddo co-founder and CEO Jeff Stewart said.

 

That is why you have to be careful whom you add as friend and whom you interact with on Facebook and other social media platforms. You never know when one of your friends can be the reason why you don’t get a loan approved.

According to this article, “Daniel Björkegren, an economist at Brown University in Providence, Rhode Island, endeavored to predict how likely someone was to pay back a loan based on call metadata. In results presented at the NetMob conference in Cambridge, Massachusetts earlier this month, he analyzed the records of 3,000 borrowers from a bank in Haiti — who they called, for how long, and how much money they spent. After applying an algorithm, Björkegren found the bank could’ve reduced defaults by 43 percent if it’d taken his approach to selecting trustworthy applicants.”

 Online behavior is also getting a higher importance nowadays and tells various tech companies whether a client is responsible or not. A German company called Kreditech, not only uses your social data from Facebook and your payments history form eBay and Amazon, but it also uses information from your online application as well. For example, if you fill out your online application very fast without reading all the necessary information about the loan you are applying for on Kreditech’s website, you will not be considered creditworthy and therefore your loan application will be rejected.

 Furthermore, Kreditech can look up your computer location to find out if you are lying about the location you live. If your laptop location doesn’t match the location you filled up in your loan application, you lose a lot of points.

Kabbage, just like Lenddo uses FISCO scores and social data. When a small business wants to get a loan from Kabbage, they can link their business’s Facebook and Twitter accounts to Kabbage website. From there Kabbage can look up the online presence on Facebook and Twitter accounts. If your business’s social accounts are kept active most of the time, your chances on getting a loan by Kabbage are pretty high. That means that keeping your social media accounts active, not only make your business look good in the eyes of your customers, but it is also used by tech companies to determine your company’s creditworthiness.

 

(Picture Source: REUTERS/Dado Ruvic)

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