How Facebook Friends Could Ruin Credit Scores

Posted by Steph Kaye on Sunday, January 19th, 2014 at 12:46pm.

Social Network Profile Scoring?



There are a number of valid reasons why you need to keep track of and current with friends and family on Facebook. While trying to keep up with the ever changing new social media trends is certainly very important, a new cause for extra caution on the Facebook friend front has been  discovered – according to CNN. There are a growing number of lending outlets that are turning to checking social connections online to assign a person a credit score. College admissions boards and employers have used social media to conduct background checks on applicants for the past few years.

If a person has a steady job and a good credit score, they don't have anything to worry about. But if a person is young, has negative or not enough credit, work for themselves, or some other way do not meet loan requirements, they now have to worry about the "facebook score" .  This is the new trend called "alternative data" which is being used to help determine what kind of a person is asking for the loan. The kind who pays back loans, or the kind that defaults.

Here is how it works, one of these lending companies analyzes all of a person's Facebook friends and if they are friends with someone who is late paying back a loan, then their credit score takes a hit. If they interact with a lot of people that are delinquent, it is even more negative points. But, on the other hand, if a Facebook user has a lot of ties to the community and nice friends with good jobs, who live in nice neighborhoods will be more of a desirable applicant.

This may all seem a bit harsh, and unfair, considering people can't possibly know about all of their friends and families credit indiscretions. But the thinking they are relying on to is that if their friends are broke then most likely they are broke also.

But, it's not only a person's Facebook  that helps determine if they are safe to lend money to, lenders are looking at other social media. Linkedin profiles tells lenders a lot, such as whether a person's stated employment is real, because their profile is supported by many other people. Online customer satisfaction is also important. If a person is self-employed with an Ebay business or they provide a service that is rated on Angie's list, and the customer's comments are positive, lenders will be more likely to loan them money because the person cares what the community thinks of them.

Alternative data also looks for other characteristics about a person, such as if the person uses the same slang language as other borrowers in default, or if a person uses vulgar or racist language.

There of course are pro's and con's to "social network profiling", and it looks to becoming a trend and an established evaluation method among lending companies. So, be aware adults and teens that social network profiles are no longer a place to act out, but a place to be real, if you want to get into college, get hired or get a loan.

If you would like more information on your local real estate market, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.

Ben Lang is a Birmingham Realtor specializing in Oakland County Real Estate. Ben is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Ben Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.


1 Response to "How Facebook Friends Could Ruin Credit Scores "

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