Dislike: How Facebook Can Hurt Your Credit

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Dislike: How Facebook Can Hurt Your Credit

Forget “you are what you eat.” When it comes to your trustworthiness as as borrower, you are who you know … online.

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Social networks are now being used by some lenders to evaluate whether you’re likely to pay them back.

The New York Observer reports that, while this methodology is still a few years away from common use by major banks, smaller institutions such as microlender Lenddo already use an algorithm based on input from a person’s various social networks to determine her creditworthiness. And more are likely to adopt the practice in the future.

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Here’s the kicker: The information used by the algorithm isn’t just what you’ve made public—the banks are requiring your login information. Everything you can see, they can see. And they could even potentially send messages to your contacts.

From the perspective of the banks, “birds of a feather flock together.” They want to reach more customers likely to use their products through you. For a consumer who wants a loan, banks having more information isn’t necessarily better—especially when it’s open to interpretation.

What an Algorithm Can See

When you register with a bank that uses a system like this, you would be required to verify your login info for your social networks, like Twitter, Facebook or LinkedIn. Information from the accounts would then be fed into the algorithm, and, using what it could glean from your social media profile and networks, the bank would pass judgment on your borrowing merit. The algorithms, still in development, are closely guarded secrets at present, but they’re essentially a way of crunching even more complex factors to assess how big of a credit risk you might be. As Lenddo’s CEO recently put it, “There’s no reason there shouldn’t be thousands of engineers working to assess creditworthiness.”

Read More: http://www.learnvest.com/2012/01/dislike-facebook-can-hurt-your-credit-score/

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Dislike: How Facebook Can Hurt Your Credit

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5 COMMENTS

  1. Looks like banks are looking for any and all reasons to NOT lend money….in time they will have no customers if they keep this up.

  2. What a bunch of BULL!!!! I have a very high credit score and I’m very proud of that. I am also a great friend to anyone …. the rich, the poor, the lost, those with low self esteem, those that have chosen the wrong path with their lives and many, many more varieties of people. You want to judge my credit score based on who I know??? Now “that” is prejudice!
    I chose to be judged on my own merits, not those that I hang with. If you want to judge me on who I hang with than YOU do not deserve the interest potential that you can gain by having me as a customer! 
    Enough said.

  3. I know of individuals that post where they are going to eat.  They share the most minute details of what they are doing each day.  I wonder do these people have a clue.  Please check me out at emergencywaterandfood.net

Comments are closed.