Some online lenders are putting their faith in social media as a source of information about creditworthiness…
The practice of screening job seekers through their Facebook accounts is old news. Although objections from civil liberties organizations persist with regard to accessing personal information, there’s no arguing the fact that some employers have legitimate concerns about the habits and behaviors of prospective employees. Thinking about joining a law firm, becoming a corrections officer or applying for a bank manager position? For these and other jobs, your Facebook friends and activities are likely to be scrutinized.
Sometimes a prospective employer won’t ask for your Facebook login information. Instead, you’ll be asked to friend someone in the HR department. Either way, the personal details revealed through social media can have significant relevance in your professional life.
Friends with bad debts? You could be guilty by association.
For many of us, it may seem unreasonable and even unfair to have our own creditworthiness judged by the credit histories of our friends. After all, it’s not uncommon to have an acquaintance who has come upon hard times for one reason or another. But the fact is that at least one lender can be convinced that if you have friends who are delinquent on loans, there’s a strong chance that you will be, too. Lenddo provides access to local sources of credit based on the creditworthiness of your contacts –not just on Facebook, but also on Twitter and LinkedIn.
The tagline that appears on Lenddo’s home page describes their lending philosophy : “Lenddo is credit based on community trust.” The company’s “About us” video traces creditworthiness back to the days when local merchants would vouch for the character (and good credit) of a community member. But thanks to the Internet, Lenddo can exploit their access to a much broader online universe of contacts.
Bottom line: For most lenders, landlords and service providers, your credit score is still the best indication of your ability to pay completely and on time.
Should you start unfriending social media contacts who may have financial problems? What about trying to game the system of social media credit scoring by adding some financially solid friends to your contact list? Sure, these strategies might eliminate the risk of having your credit impugned by social media contacts. But the vast community of lenders, service providers and landlords isn’t about to give up on traditional credit reports and credit scores –the statistics gathered, guarded, analyzed and dispensed by Experian, TransUnion and Equifax –the three main credit agencies.
One reason that financial experts believe that our current credit reporting system is here to stay is that it can’t be gamed by consumers. Debts can only be cleared the old-fashioned way: by paying them off. If you habitually miss the due date for a monthly car loan payment, this tardiness is sure to become part of your credit history. The credit scores based on data by Experian, TransUnion and Equifax also typically factor in public record information such as personal bankruptcies, foreclosures, liens and wage attachments. In short, your credit report provides much more complete and broad-based details than any social media site.
