Facebook is a free social-networking site and also the most popular social media site. The world knows that Facebook collects user data and uses the data to target ads. It now seems the social networker will soon use the data to get you an approval for a loan request.

Facebook Friends Can Help You Get A Loan

How the technology works

On Tuesday, Facebook was granted a patent for authorizing and authenticating an applicant for a loan by an analysis of his/her user profile. This means the social connections of a user can help him/her getting a loan approved. SmartUp Legal was the first to notice the patent.

Describing the process, the patent explains when a Facebook user sends a loan request, “the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes.” This means that whenever a lender receives an application for a loan, they will make a thorough analysis of the credit ratings of the people connected with the applicant. And, if the ratings exceed the minimum credit score, the application will continue to be processed. If it fails to touch the minimum, then it will be rejected.

Will Facebook develop the patent into feature?

The technology or the patent actually does not belong to Facebook, but to Friendster, which is said to be the first modern social network, and was acquired by Facebook in 2010 for $40 million. Christopher Lunt, Friendster’s then-VP of engineering who is now working with the health insurance shopping site GetInsured, could be the inventor of the patent.

It can’t be said for sure whether the patented technology will actually be developed as tech firms are known for filing more patents than they actually commercialize. The legal viability of the patent is also in question as the Equal Credit Opportunity Act strictly defines the parameters that creditors can use to decide on a loan, and using a social network is certainly not mentioned in the guidelines. However, a few of the consumer lenders such as Affirm are already taking note of non-traditional user data to judge credit risk.

“It’s nothing to lose sleep over for people with decent credit history, but it could potentially affect those who are borderline to begin with,” Greg McBride, chief financial analyst for Bankrate.com, told CNN, in discussing the use of social media profiles in the credit approval process.