Should Social Media Be Used to Determine Credit? | The Frugalista

Should Social Media Be Used to Determine Credit?

by frugalista on February 26, 2013

Hey Frugs! I’ve written before about the finance industry’s push to use social media sites to help determine your credit worthiness. I think this is a personal finance trend that isn’t going to leave anytime soon. The Economist had an extremely telling article on how upstart lending institutions are creating profiles of potential customers.

Here are a few highlights from the article:

1) Applicants who type only in lower-case letters, or entirely in upper case, are less likely to repay loans, other factors being equal, according to the founder of ZestFinance, an American online lender.

2) One software company, Neo, helps determine if applicants’ jobs are real by looking, with permission, at the number and nature of LinkedIn connections to co-workers. It also estimates how quickly laid-off employees will land a new job by rating their contacts at other employers, according to The Economist.

3)Movenbank will monitor messages on Facebook and lower interest rates for those who talk up the bank to friends.

Yeesh! Part of me is fascinated about how these algorithms are used. They seem to work in some cases. I also think it’s a little bit intrusive for a company to ask for such information. Then again, some of these companies are at least asking to check out your profiles. Also, checking out your credit report is a pretty intrusive process. If you want to borrow money from someone, you WILL get checked out. Another part of me is concerned. Should you be judged by your diverse group of friends? Why isn’t a FICO score enough? Also, do I really want to spend my time on Facebook, promoting a banking institution to my friends? I think that may be a way to get unfriended! Who wants that?

Let’s all focus on managing our money so that we won’t need to take out loans.

What do you think? Should your social network determine your credit worth?

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