Your Facebook friends can affect your credit score

Why hitting "like" could be more trouble than it's worth if you're looking to get a loan

Topics: Loans, lending, Credit score, social data, Facebook, FICO, Lenndo, , , ,

Your Facebook friends can affect your credit score (Credit: Sarawut Aiemsinsuk/Shutterstock)

We already know that nothing we do online is sacred or secret, so it shouldn’t come as a surprise to learn that people with hard-to-access credit histories may now have to start monitoring their social media interactions.

While traditional lenders still prefer to look at payment history and use credit scores like FICO to make lending decisions, a few small tech lenders are now using social data and online behavior to determine credit risk, reported CNN Money:



One such company, Lenddo, determines if you’re friends on Facebook with someone who was late paying back a loan to Lenddo. If so, that’s bad news for you. It’s even worse news if the delinquent friend is someone you frequently interact with.

“It turns out humans are really good at knowing who is trustworthy and reliable in their community,” said Jeff Stewart, a co-founder and CEO of Lenddo. “What’s new is that we’re now able to measure through massive computing power.”

Other companies around the world are relying on dubious online data habits to determine loan risk such as  whether you fill the form out in all-caps or no-caps — both no-no’s in the eyes of German lender, Kreditech.

 

Liz Fields is an Australian freelance journalist based in New York who has previously scribbled for Slate, ABC News, Sydney Morning Herald and more. Follow her on Twitter @lianzifields

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