Last year, Facebook pulled back the reigns on plans to allow lenders access user’s information in order to determine credit worthiness. The idea was that FICO scores, being based on primarily on credit card usage, loans and bill payment, only provide part of the picture when it comes to piecing together a person’s credit profile.
It was theorized that online activity, particularly social media activity, can potentially provide a much more complete picture of what kind of person you are, and whether or not you can be counted upon to repay a loan.
This is, of course, a little freaky. Most of us have had a crazy night or two we wish to forget splashed across a friend’s feed, or a less than delicately worded political post in a moment of self-righteous passion.
Well, the truth is you can relax…for now. Facebook was poised to give lenders access to this information, but then decided against it, ramping up privacy initiatives and seriously limiting the information a third party can access. Other social media outlets essentially followed suit.
But as is always the case in the relentless march of technology, once the floodgates have opened it’s probably only a matter of time before financial entities get access to the incredibly useful personal data Facebook and the like have to offer.
In fact, there are already many third-party providers like Friendlyscore and Kountable Inc. that collect and analyze different kinds online behavior for lenders in order to determine a given borrower’s risk and default probability. This business model is already being used to build credit profiles of people with no credit history, like young people just starting out, or those living in parts of the world where people traditionally have not been credit rated.
When the social media info is not available, these companies will often analyze mobile calling and texting patterns, or websites visited and Google keywords to obtain information.
What Are They Looking At?
Notwithstanding the discussion as to whether or not some, or all, of the below behaviors indicate fiscal irresponsibility, let’s take a look at what lenders might be interested in in order to determine your “personality score.”
Simply analyzing one’s profile could allow lenders to build a picture of the user’s persona, their habits, preferences, lifestyle, etc. Some of the more obvious things they’d be on the lookout for are, let’s say, you are jobless when you’ve claimed to be employed, you’re fond of online gambling, you engage in high-risk activities like blacking out or driving drunk. Or you tend to live beyond your means. All this can be ascertained from status updates, shares, check-ins, likes, tweets and retweets.
There are also sophisticated algorithms that can be employed to measure a person’s tendency to express hate and anger, or go off on emotional tirades over Twitter or Facebook. If this is something lenders are targeting, they’ve probably identified some kind of correlation between this behavior and financial unreliability.
Finally, another correlation seems to have to do with your friends on social media, i.e. who you associate with, the quality of the connections, the size of your friend list, and what their credit scores tend to be as well. This also can provide useful data to lenders as to the kind of life you lead.
As of now, Facebook and other social media platforms are still limiting third-party access. But considering the role the Internet plays in our world currently, we can only expect it to expand in the future, infiltrating our real lives as the line between the real and the virtual becomes more and more blurred. Our online activity and personas will most likely be increasingly relevant to those entities deciding how much of a credit risk we are.
In the meantime your best bet is to know where you stand with your traditional credit score. Advertising partners FreeCreditReport.com offer your Experian credit report and score updated every 30 days absolutely free.