Most of us are aware that our public social media presence can affect our career prospects, with prospective bosses regularly scanning Facebook and Twitter profiles of candidates in a bid to find out what sort of a person they are.
But how we behave, the images we post and the comments we make on our social media pages could now also have a direct impact on whether we’re deemed to be creditworthy. Lenders overseas routinely scan social media to help decide whether to approve loans or credit cards. And, their tech savvy counterparts in the UK are understood to be about to follow suit.
Why social media is relevant
You may have thought that what you say and who you interact with on social media forums is irrelevant to whether or not you can pay back a loan. But some lenders believe this new form of credit assessment is invaluable in helping them gain an insight into a potential borrower’s financial reliability.
Those who socialize online with people who have good credit records are thought to be more likely to be reliable when it comes to paying back outstanding loans. That means if one of your online friends has failed to pay back a loan, your own credit score could be dented.
Unlike days gone by when a bank manager might have sat you down in the office to decide whether to give you a loan, a lender can now build up a picture of the type of person you are and how responsible you may be by simply looking at your online presence.
Other online behaviour
And, it’s not just your Twitter, Facebook or Instagram accounts that lenders are analysing. They are looking at cyber shopping habits to decide whether you’re a safe bet when it comes to handing out a loan. That could mean looking at the likes of eBay to figure out whether you are a quick payer.
Some overseas lenders are even taking into account how good your grammar and punctuation is when filling out online forms, deducting credit points for any mistakes made.
How fair is it?
While you might not agree with their methods, information that you make public online can be looked at by anyone. And, with the world becoming more and more obsessed with social media, it’s perhaps understandable that lenders are starting to utilise these forums as a way to find out more about potential borrowers in a bid to cut their financial risks.
Coming to the UK?
Currently, this type of credit assessment is only being used by lenders overseas, but analysts are predicting the method will be implemented in the UK by the end of this year. While traditional lenders are still relying heavily on official credit scores based on payment history, newer lenders are more likely to look at social connections as an indicator of your creditworthiness.
And, those newer lenders are now selling on the technology they use to trawl through social media information, so it could well be picked up by national and niche lenders in the UK very soon.
- Photo provided by: smartphotostock.com
Zak Jacobs it Director of UK Digital Marketing Agency Red Alien and an experienced Social Media and organic search (SEO) professional, passionate about online integrity, user experiences and optimisation strategies
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