Facebook Presence, Habits Could Affect Your Creditworthiness

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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.

Personal Liberty

Ben Bullard

Reconciling the concept of individual sovereignty with conscientious participation in the modern American political process is a continuing preoccupation for staff writer Ben Bullard. A former community newspaper writer, Bullard has closely observed the manner in which well-meaning small-town politicians and policy makers often accept, unthinkingly, their increasingly marginal role in shaping the quality of their own lives, as well as those of the people whom they serve. He argues that American public policy is plagued by inscrutable and corrupt motives on a national scale, a fundamental problem which individuals, families and communities must strive to solve. This, he argues, can be achieved only as Americans rediscover the principal role each citizen plays in enriching the welfare of our Republic.

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  • FreedomFighter

    “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”
    These will be burdens well worth the trouble, It would seem unbelievable that social media could and will be used to judge credit worthiness, buy from our array of establishments or you have not credit…what a trap, profile your life and habits, peg you into the little hole they have for you, and feed you crap designed for your specific consumption…and if you ever try to leave the little hole they put you in…you have not credit.
    No thanks, I will just pay my bills on time, and live a prudent life. Screw the trap.
    Laus DeoSemper FI

    • Don 2

      I agree with you FF. It still amazes me how people will put every aspect of their personal and family lives on Facebook, or are actually gullible enough to believe that they have hundreds of friends.

  • laura merrone

    More tyranny…does it ever end? Do we have any privacy at all? What is privacy? I don’t know any more…Lesson to learn from all this: try to avoid going into debt or getting a credit rating in the first place. We’ve learned our lesson the hard way on this…

  • johnrhett

    This is one of the stupidest ideas I’ve seen this week [and that’s saying something]. Your FB friends are usually people you don’t know, have never met, and never will meet in person. How are you supposed to know if they’re honest or not? You know the old scenario: that beautiful 22-year-old babe you’ve been messaging is really a 55-year-old man with abundant nose hair.

    • TheSilverRanger

      Exactly! Rule of the internet #29: In the internet, all the girls are men. And all the children are undercover FBI agents.
      Rule of the internet #30: There are NO girls on the internet.

      • WTS/JAY

        LOL!!! Correctomundo, TSR!

    • Robert Messmer

      Well Lenddo and Kabbage being private companies can use any criteria they wish and the article did say that Kabbage at least only uses it to augment not replace traditional credit scores. The problem is that according to Facebook’s TOS you are only to “Friend” someone that you actually know other than on Facebook. If FB actually enforced that, then no problem — your “friends” would actually be people who know you at least to some degree. Facebook in order to make money sells space to various game companies–Buffalo Studios and Zynga are two examples. Their games require large quantities of team mates which means that really successful players wind up with the maximum number of friends for Facebook which is 5,000, four thousand nine hundred and ninety-five of which you know nothing about except they play the same game as you.

  • ibn insha

    How creditors link a name, date of birth, social security number and address with a Facebook account?

    • FreedomFighter

      Obamas internet Universal User ID. Soon you not be able to log onto the net without a unique identifier.
      Laus Deo
      Semper FI