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March 21, 2014
If people are willing to create false online identities to find love, I don’t think it’s farfetched to imagine some others would edit their Facebook profiles to help them score a car loans or credit cards.
Some small U.S. lending companies have begun to mine data from sites such as Facebook, Twitter and LinkedIn to help further weigh a consumer’s creditworthiness, according to a report from the Wall Street Journal. For example, lenders say they could use social media profiles to verify loan application information. Even FICO (creator of the widely used FICO score), is considering whether to incorporate social media behavior into its scoring algorithm.
While it makes sense to use a variety of tools to check a consumer’s creditworthiness, examining social media profiles, especially Facebook, seems fraught with potential pitfalls. After all, an entire reality TV show called “Catfish” is based on stories of people who have used profiles on Facebook and other sites to deceive people into believing they are someone else.
Despite the pliability of social media, a few smaller foreign tech companies have already started using information from sites such as Facebook to help make credit lending decisions.
Lenddo, an online social lending company based in the Philippines, checks to see if loan applicants regularly interact with friends who already hold delinquent loans with the company. Too much interaction with those people could flag them as a risk, according to an article published by CNNMoney.
Big Data Scoring, a credit scoring firm based in Estonia, looks at how much time a user spends on Facebook and how educated their friends are. According to the company’s CEO and co-founder Erki Kert, experience has shown him that those who use Facebook only a few times a day and have well-educated friends tend to have better financial habits, which will likely mean they are a lower credit risk.
Using Facebook too much may be a negative, but not using Facebook enough could also hurt your chances of being offered credit. According to Russ Warner, CEO of ContentWatch, if someone is more responsive and dedicated to communication with their friends on Facebook, that reflects responsible behavior and lenders could anticipate the same kind of relationship with that person.
However, all these aspects can be directly controlled by Facebook users, so it wouldn’t be hard to construct a profile that gives financial institutions exactly what they want to see.
It would only take a few minutes to delete fiscally irresponsible friends, make sure the information you put on a loan application matches your profile, interact with a few people and then log off so you aren’t spending too much time on the site.
According to a study conducted by Carnegie Mellon University, self-censorship on Facebook is already prevalent. Based on data collected from 3.9 million users, 71 percent consistently revise or retract their status posts, comments and media shares, evidence that users act with some type of perceived audience in mind.
As a Facebook user for almost a decade, I am actually surprised this number isn’t higher. I’ll admit I’ve been one to self-censor my Facebook activity to put forth the best possible image– deleting statuses my peers might find annoying or inside jokes posted by friends that the general public could misconstrue.
Facebook censorship is not only happening, it’s being encouraged. Before graduating from college, I heard many career counselors tell students to act with caution on social media so as not to turn off potential employers.
I think that is sound advice to an extent, but if an individual stops themselves from posting updates that could jeopardize job offers, wouldn’t it make sense that they would use that same type of censorship if they knew what they post could ding their credit score?
I know I would think twice.
Now, I am by no means condoning manipulative behavior. It just seems that if financial institutions are looking for an additional way to determine someone’s credit risk, they should turn to an outlet that isn’t so easily gamed.