Who your friends are on Facebook and who you follow on Twitter may get you in trouble in ways you never thought about before. New tech start-ups are beginning to use social media data in order to determine credit worthiness. The technology is getting better at looking at your social media footprint and using that data for determining whether you are worthy of a loan.
LendUp is a San Francisco-based start-up that is one of the frontrunners in this new practice of mining data about people from social networks. They look at applicants social media pages and use the number of friends they have as well as how often they interact in order to help them determine if someone is worthy of a loan.
Lenddo is an international company that gives out small loans to invest in people’s ideas. When trying to determine whether or not to accept or deny an application, they look at an applicant’s Facebook account to see if they’re friends with anyone who has been late on a Lenddo payment. Of course, this also brings up the issue of privacy online.
German company Kreditech uses around 8,000 different data points to make a loan determination. From Facebook to eBay to Amazon, they gather as much publicly available information as possible in order to make a decision on whether or not to loan someone money. Kreditech also looks at how people fill out the online application. ALL CAPS and you lose points. Additionally, no caps and you lose points.
Kabbage is a company that is going about it a little different. They ask customers to give permission for Kabbage to check their Paypal, eBay and other virtual wallet accounts to see cash flow. A higher Kabbage Score leads to being able to borrow more money. According to them, it only takes them approximately seven minutes to determine whether they should loan someone money or not. That’s quick!
Fair to Do This?
Some have wondered whether the Fair Credit Reporting Act (FCRA) applies to this methods and tactics of getting information on potential borrowers. The Federal Trade Commission in the US failed to comment to Mother Jones for an article from earlier this year when the question was brought up. This is a valid concern. Just because more information is available doesn’t mean it should be used maliciously or without the knowledge of ordinary citizens.
When it comes to getting bad credit loans, the Internet is where you should start your search. The good news is that it is possible to get personal loans even if you have a spotty credit history. Just be sure that you have enough Facebook friends, Twitter followers, and that you use proper grammar for all your social media posts. And if you have an opinion about companies doing this, leave a comment below and share your thoughts.
Photo Credit: Flickr/Daniel Iversen
