Loan companies may look at your Facebook page to evaluate your credit
Don't Waste Your Money
5:00 PM, Jun 3, 2013
5:58 PM, Jun 3, 2013
(WXYZ) - Being an avid Facebook or twitter user can potentially help to get a loan. It is found that some financial companies are starting to use social media to connect to their customers and are even using it to evaluate if they are credit worthy.
BMX biking Adam Grandmaison's passion and business. He has a popular website that sells cycling t-shirts, hats and stickers. When his company started to take off he applied for a small business loan to start a new smartphone app.
Grandmaison says his only problem was that, "the loan company was concerned about the fact I have really bad credit."
The lender would not give him money for the application until Grandmaison showed them his company's Facebook page and twitter account. The Facebook page soared with more than 100,000 "likes" and the twitter account had more than 20,000 followers. After seeing those numbers the loan company decided that his app was worth the risk.
"A strong social networking presence is that it really kinda acts as your currency in terms of it represents who you are online," says Grandmaison.
In some cases your online reputation could mean money in your pocket. A number of new financial companies are using social media as a way to evaluate applicants. Start-up company LendUp, still reviews loan applicants' credit reports like a traditional bank, but if the borrower agrees they will check out their Facebook and twitter profiles to get a sense of who they are.
"How long have people had their account? How strong is their network? How diverse is their network? How much do they interact?" Says Sasha Orloff, CEO and co-founder of LendUp.
However, they do not review pictures people post, or groups someone "liked." "We don't look at anything that could be construed as discriminating against somebody for things like race or religion or color or marital status or age," says Orloff.
On Deck lending uses review sites like Google Places and Yelp to check out small business loan applicants. Consumer experts worry this trend could hurt people who don't use social media, or want to keep their accounts private.
"There's a lot of potential for consumers to game that system and potentially for people who may not be credit worthy to appear credit worthy," says John Breyault from the National Consumers League.
The FTC is equally concerned and is watching the trend closely. 90% of top U.S. lenders still rely mainly on a person's FICO or credit score to make decisions.
"We are always looking at different things, social media will fall into that, but right now it's still too early," says Anthony Sprauve, director of public relations for FICO.
Grandmaison says his social media ‘rap' was very predictive of his success and the loan got his companies wheels spinning, "It's going super well, I mean we're making payments on it and it should be paid off in six months."
The FTC says it is important that anyone who is turned down for a loan is told exactly what information the lender used to make that decision. This gives loan applicants the change to correct any information that may be listed incorrectly.