As social media continues to supplant real living for more people who’ve embraced technology’s offer of an always-on existence, real-world repercussions of laying one’s persona before the public often come along in unexpected ways.
One side effect of America’s turn toward technocracy is the fact that the rest of the digital world is slowly beginning to view a person’s online presence (or lack thereof) as an indicator of his creditworthiness.
The relatively new phenomenon of lenders using Facebook to reach an up-front decision about whether you’re likely to pay back a loan is, for now, confined to that segment of would-be borrowers who lack established credit but who remain highly engaged in social media.
According to a CNN Money report, people who’ve left no footprint with FICO and other credit scoring analysts are increasingly being scrutinized by companies that use Facebook to determine, based on individuals’ social associations and online interests, whether they represent a safe credit risk.
How does it work? Companies like Lenddo find out whether you’re Facebook friends with others who have previously taken out a loan from the company, which bills its business model as “credit based on trust.” If one or more of your Facebook friends hasn’t been timely with loan repayments, it lowers your chances of getting a loan from Lenddo. But if your associates have been timely, your chances of approval increase.
“It turns out humans are really good at knowing who is trustworthy and reliable in their community,” Lenddo CEO Jeff Stewart told CNN Money. “What’s new is that we’re now able to measure through massive computing power.”
It’s not just a person’s Facebook habits that can make or break the technocracy’s judgment of their financial trustworthiness. Small-business cash-advance outfits like Kabbage augment an applicant’s traditional credit score with information mined from Big Data, including applicants’ payment histories through online exchanges like PayPal and eBay.
Most of the companies that have so far turned to the Internet to assess individuals’ credit risks aren’t operating extensively in the United States. But just as the Internet has insinuated itself into many employers’ hiring practices, online-based credit “checks” that examine a person’s habits, preferences and associations are expected to become more common.
The practice is still too new to forecast the fates of those Internet users who have no plans to join Facebook or establish a history of online commerce by buying things off Amazon or eBay. But precedent suggests that those who choose to live free from the tether of technology-based social relationships and financial transactions could face undue burdens as their world comes into contact with that of the majority — a majority that grows increasingly contented with swapping virtual life for real life.