Why your Facebook could start affecting your credit score

Looking up loan applicants’ social media activity has become a popular trend among lenders, and major credit rating agencies like Fair Isaac Corp (FICO) are starting to catch on.

Facebook factors like the number of friends an applicant has, the number and time span of jobs they have listed on their timeline and status updates about losing a job help to decide whether they’re approved or denied, and now will likely begin to influence their credit score as well.

“There could come a time where certain social media could be predictive and we’re looking at that, but it isn’t yet,” FICO consumer-credit specialist Anthony Sprauve told the Wall Street Journal.

FICO scores are used in more than 90 percent of all credit worthiness lender decisions.

Twitter and LinkedIn are also used to follow a potential borrower’s tweets about their job, and whether or not the job they have listed on their application matches the one posted on their LinkedIn profile. Lenders also check and see whether the friends and connections of an applicant have paid back their loans.

Some are even using it to communicate with current borrowers about their repayment options and urging them to make payments on loans. Lenddo, a platform that helps potential borrowers build creditworthiness through social media, sends messages about repayment directly to users’ accounts.

Government regulators and privacy advocates like the Consumer Financial Protection Bureau and the Federal Trade Commission have begun examining lenders’ use of social media, with early reports calling it a violation of consumer privacy.

With laws already on the books in some states to keep employers from using social media from judging job candidates and schools from evaluating prospective students, a similar law against the use for approving loans and establishing credit ratings is a possibility.

Via: Daily Caller

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