Lenders Are Screening Borrowers through Social Media
Does having a lot of friends on Facebook or being popular in certain circles constitute a creditworthy image? Apparently, some lenders think so. Some banks and lending companies think that a person’s social standing, professional connections and online reputation are important factors to consider when extending credit, particularly to someone with a poor credit history who might have trouble getting a loan.
Due to the personal data found on many social media profiles, it’s now become a trend for bankers and financial institutions to use social media accounts in screening loan applicants or borrowers for any undesirable traits or opinions. They turn to social networking sites such as Facebook, Twitter and LinkedIn to look further into a borrower’s identity and creditworthiness. These social media sites have become an Intel of some sort in helping credit companies make better-informed choices.
This practice is something consumer groups and regulators have been expressing concern about. The reason it’s become alarming is due to the perception that borrowers could very well be targeted with higher interest rates and people who have missed payments would automatically be considered risky bets and denied credit entirely based on the state of their social media accounts. There are no federal laws currently in place to govern this system or to protect borrowers from unfair scrutiny.
Although this scheme appears to be limited to smaller financial institutions that provide smaller loans and operate with a larger degree of risk, it’s expected that the use of social media accounts by lenders will gain popularity in the years to come.
Bad credit happens and when it does happen, people struggle to find funding. Fortunately, there are lending companies that provide bad credit loans to those with a poor credit history in competitive interest rates without any judgment.
If you answer yes to the question “Is social media standing in the way of you getting the financial assistance you’re applying for?” then it’s time to clean up your social media profile. Social media will remain to be, well, social which means all of the information that’s freely provided by the users to the social media sites could turn out to cost them not just their stature but the financial assistance they need.