Have you ever thought that the conversations you have on social media could impact your borrowing ability? Or better yet, have you thought the conversations your friends have on Facebook could poorly impact your ability to borrow? If you have not, then maybe it is time to start thinking about it.
There is a growing community in the lending industry that takes into consideration a loan applicants social media and financial habits as well as their online acquaintances’ social and financial habits.
Who you socialize with online could have an impact on what you are able to borrow with certain financial institutions.
"It turns out humans are really good at knowing who is trustworthy and reliable in their community," Jeff Stewart, a co-founder and CEO of Lenddo, told CNN.
Lenddo is one of the new growing financial institutions that uses not only the applicants social media and online behavior, but also the online behavior of the applicants' acquaintances to help determine credit worthiness. In other words, if your friends shop a lot, it could be an indicator that you do too.
It gives a whole new meaning to the old cliché “birds of a feather flock together.” So if one of your Facebook friends skipped a payment with Lenddo, it would reflect badly on you if you wanted to apply for a loan with them.
Kabbage, a cash-advance institute to small businesses, considers applicants online pay accounts with PayPal and eBay just to name a few. Borrowers can also link their Facebook and Twitter accounts to the site to potentially increase their borrowing power with Kabbage.
A German company, Kreditech, weights the time of day you are online and whether or not an applicant uses capitol or lower case letters in their application to help determine credit worthiness. This is in addition to information they attain from Facebook and other online accounts. They also use GPS data to help in their determination.
These are only a few of the many institutions that are considering social factors before they will lend. However, they seem to only be focusing on niche markets. For example, Lenddo works with the emerging middle class and only lends in the Philippians and Columbia, but hopes to expand. Kabbage targets small businesses.
Most U.S. lenders are not using potential borrowers and their acquaintances social behavior in determining loan approval. However, a new growing sector that does consider it, may give way for major lenders to follow suit. Social media habits of applicants and their friends will probably never be the only factor, but it may be something lenders will consider before they lend in the future.