According to a recent report from the Wall Street Journal, some lending companies are starting to use social media when determining a borrower’s eligibility for a loan. Lenders will look at potential borrowers’ Facebook, Twitter, LinkedIn, and other social media profiles to gauge their financial risk and insure that their information is valid. For example, you might claim to be employed but post a Facebook status about quitting or getting fired from your job. Lenders will be able to see this and may not want to loan you the money. Furthermore, lenders will also be able to see how many likes you get and how you interact with your friends/ followers. This could be a significant factor in determining your eligibility for a loan.
This practice is used mainly by startups that grant smaller loans to small businesses and individuals. However, other lending companies and FICO have acknowledged that they may soon start using social media data to help determine credit scores. Many consumer groups are worried that this is a breach of consumer privacy. Furthermore, social media checks could prevent otherwise qualified applicants from getting the loans they need, and the Consumer Federal Protection Bureau currently has no safeguards in place.
So, be smart about what you reveal over social media. Although this practice is not mainstream yet, your social media posts may affect your ability to get a loan in the future.
Source: Wall Street Journal
