Facebook can provide a lot of benefits when it comes to connecting with people from all over the world on a personal and professional level. But beware because it also has its pitfalls.
Did you know that who you connect with on this top social networking site can also affect your credit score? They can help you in terms of getting approved for a loan but on the flipside, they can also cause you to get rejected for a loan.
The reason is that some tech startups are now using social data to find out a person’s financial capability and credit history. While traditional lenders depend primarily on a person’s credit score such as FICO to determine if they’re worthy of a loan, there are now lending companies that utilize data from social networking sites to determine an applicant’s creditworthiness. As such, it may be time to be extra cautious in choosing your friends on Facebook.
Lenndo makes use of Facebook to find out if loan applicants are friends with people with a history of late payment to a loan. If you happen to be constantly communicating with this delinquent person, then you’re in bad luck.
The CEO of Lenndo Jeff Stewart said they are now using computing power to figure out trustworthy and reliable people.
Kreditech, a German firm, also utilizes social data up to 8,000 points when evaluating a loan application. They use information not only from Facebook accounts but as well as from Amazon and eBay.
Another measure the company uses is the way an applicant fills out its online application form. If you read information concerning a loan on the Kreditech’s website, you have a good chance of getting a loan. But if you tend to fill out the form using all capital letters or all letters in the lower case, you get lower points.
The company also highly considers an applicant’s location and if your computer says it is located where you live or work, you have better chances of getting approved.
The Kabbage online service is also recognizing the value of social data. Its borrowers practice transparency in their operations and gives the company access to their various online accounts such as on PayPal and eBay where information on their sales and delivery can be found. Additionally, they can opt to link their Facebook and Twitter accounts to the Kabbage website once they start getting credit from Kabbage.
Focusing on providing cash advances to small businesses, the company’s chairman and co-founder Marc Goblin said they get information faster when utilizing social data. He said they can determine the creditworthiness of a business and approve its loan in just a matter of seven minutes.
About the guest author:
Janine is a freelance blogger who contributes financial articles on various sites on behalf of Lance Surety Bonds.