With social media, such as Facebook, being so influential in our every day lives, could that mean that who we associate with on these sites can play a role in our credit scores?
According to CNN, it definitely could! CNN reported that “a handful of tech start-ups are using social data to determine the risk of lending to people who have a difficult time accessing credit.”
ABC News 15 reported that some financial lending companies have found that social connections can be a good indicator of a person’s “creditworthiness.”
Take the company Lenddo; according to CNN, Lenddo determines your creditworthiness on criteria such as if you are friends with someone who was late paying back a loan to the company.
“If so, that’s bad news for you. It’s even worse news if the delinquent friend is someone you frequently interact with.”
“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.”
Lenddo isn’t the only company out there using social media to determine people’s creditworthiness.
CNN reported on a company known as Kabbage, an online service that offers cash advances to small businesses.
Kabbage considers many things, including an owner’s FICO score when getting to know potential customers.
According to CNN, borrowers grant Kabbage access to their PayPal, eBay and other online payment accounts, disclosing real-time sales and delivery information.
The company says it can determine a business’ creditworthiness and put money into its account in just seven minutes. The report continues on to say:
“Once a small business is getting credit from Kabbage, it also has the option to link up its Facebook and Twitter accounts to the site, which could provide a bump in its ‘Kabbage score.’
The small businesses that do are 20 percent less likely to be delinquent on their loans, Marc Golin, Kabbage’s chairman and co-founder said.”
“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,” he said.
While many think utilizing social media in this way could be helpful, is it really all that ethical?
Is it fair to say that just because one of your (possibly) hundreds of Facebook friends isn’t creditworthy, that means that you aren’t?
Well, if you’ve ever heard the expression “birds of a feather, flock together,” then the answer would be yes, it is fair; but many still would like to debate this.
Social media, while useful, can be a tool that could work against you; such is the case if Facebook can be used to determine your creditworthiness, because it could have the potential of making or breaking your credit score.
Image via Shutterstock/1000 Words]